TRUSTEES’ REPORT

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CONTENTSOur mission 5

Chairman’s report 6

Achievements and performance 8

Plans for the future 13

Financial review 15

Structure, governance and management 19

Risk management 21

Statement of Trustees’ responsibilities 26

Independent auditor’s report 27

Group statement of financial activities 28

Charity statement of financial activities 29

Group balance sheet 30

Charity balance sheet 31

Group cash flow statement 32

Charity cash flow statement 33

Notes to the financial statements 34

Trustees, oQcers and professional advisers 74

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5

Motivating society to give ever more effectively, helping to

transform lives and communities around the world

CAF aims to deliver on its mission through our work in a number of focused areas:

We support major donors at every stage of their philanthropy from sustainable funding through to

strategic advice.

We work with regular donors to enable them to give eVective support to charities.

We work with companies, providing support for the work they do with charities and communities and

helping them to engage their employees in charitable activity.

We work with a wide range of mainly smaller and medium sized charities, providing solutions for their

funding and finance needs, across banking, investments, fundraising and social investment.

We work through our global alliance to provide services and use its influence to support international,

individual and company donors to make the most of the resources they have to give, wherever in the

world they choose to focus.

We represent the needs of donors and the charitable sector to government and other decision makers

in working to improve the giving environment and to secure supportive legal, fiscal and regulatory

conditions for donors, charities and social enterprises.

OUR MISSION

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CHAIRMAN’S REPORTTumultuous times create uncertainty, raise challenges, bring

opportunities and leave their mark when the dust settles. But

although political and economic shifts can be sudden and

unpredictable, one thing endures: the desire to give

remains undimmed.

Brexit, the Trump presidency, a snap general election; this

has undoubtedly been a year of surprises and unexpected

change. But despite the challenges, the simple desire to give

to a cause you care about has remained a constant.

One of the great strengths of CAF is our ability to track giving

over long periods of time and look at the trends as they

unfold over the year. In the aftermath of the financial crisis,

and after the EU referendum, giving to charity has remained

remarkably stable.

We see this resilience every day in our work at CAF. This year

has been a year of records. We were able to gift a record

amount to charities around the world, breaking the £500m

barrier for the first time. Donations into CAF have broken

records at more than £600m.

Behind those numbers are amazing stories, stories of

people giving a few pounds a week through their payroll,

to entrepreneurs creating wealth and deciding that it is the

right thing to start a philanthropic journey.

It is also a story of innovation, helping people achieve

their aims. So, CAF has created ways to channel millions

of pounds from the five pence levy on plastic bags at the

checkout to charitable causes.

We have created Britain’s first and only secure, digital

trading account designed for charities of all sizes, giving

charities the ability to research, manage and trade

investments in one place online for the first time, building

on the existing investment services provided by CAF.

CAF Bank has lent millions more to charities, investing in

schemes to build social housing, create homes for people

recovering from drug addition and build new facilities to

give churches and neighbourhood groups new sources of

income that will see them thrive into the future. Our social

investment arm CAF Venturesome, supports some brilliantly

entrepreneurial projects from Hubbub a fast-growing

environmental charity which runs creative campaigns

to reduce food waste and litter to the Llanhilleth Miners

Institute, a vibrant centre in the Welsh Valleys.

At one level, CAF’s work is straightforward. We provide

services to help people and companies give simply and

easily, and we provide financial services so charities can

make their money work harder. In detail, however, this is

complex work. For instance, we are using the techniques

of advanced finance to change the way money flows into

and out of charities for the better – transforming lives and

communities around the world.

We also have the opportunity to use our research, our

insights, our policy work and our profile to encourage people

to give and to ensure charities have a better environment in

which to work.

That approach is summed up by the work of our oQces

around the world. Our colleagues in countries such as the

United States, Canada, India, Brazil, Russia, and South

Africa have built their work facilitating cross-border giving

and building civil society, helping channel the rapid growth

of fast-developing economies to address social needs.

For decades our colleagues have been working to build civil

society around the world, from the collapse of communism,

from the fall of apartheid, and through huge economic

growth. We have the potential to do so much more, to

harness huge social movements for good and foster the

kind of giving culture that has made charity as we know it

such a powerful force for positive change.

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Closer to home, our campaigns team has been able to grow

the global #givingtuesday campaign in the UK, helping

1,600 charities and businesses talk to new groups of people

about their favoured causes.

CAF also exists to bring people together, to find solutions

that support charities.

Our expertise means we can help when rules change. So,

when Gift Aid rules changed for partnership firms we were

able to work with major law firms and professional services

companies to create a new partnership account, allowing

them to continue giving, using our generous Gift Aid system

to support charities everywhere.

With change, comes challenge. As for many organisations,

the cut in interest rates following Britain’s referendum on

European Union membership presents a challenge for CAF

and we are taking mitigating action where possible, and

working hard to grow the amount we can send to charities,

become ever more eQcient and grow the support we oVer

to charities everywhere we can.

Of course, using the mechanisms of finance to achieve

social good is a team enterprise. StaV and my fellow

trustees oVer infrastructure that helps charities, businesses

and other social purpose organisations to achieve so much,

both in the UK and around the world.

All of us were delighted to see John Low, who has achieved

so much as Chief Executive of CAF, receive a knighthood for

his services to charity in the 2017 Queen’s birthday honours

list. This great honour reflects the amazing impact of CAF,

and of every staV member, as well as of course recognising

John’s strong and long-term leadership.

Above all else, I would like to thank the hugely generous

people who give through CAF to tens of thousands

of charitable causes around the world. Their support,

unwavering through times good and bad, is what allows us

to make a real diVerence to so many causes in so

many ways.

Dominic Casserley

Chairman of Trustees

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ACHIEVEMENTS AND PERFORMANCEOverview

CAF draws on more than 90 years of experience at the

forefront of philanthropy both in the UK and around the

world as one of Europe’s largest charitable foundations. It

exists to support the not-for-profit sector. Despite economic

uncertainty, political change and historically low interest rates,

we have channelled record sums to charity in the past year

and provided a wide range of services to charities, donors and

companies both in the UK and across the globe.

Our aim is to increase the flow of donations to charities

through CAF, maximise donations to the whole charitable

sector and secure a supportive environment for charities

everywhere. We help charities manage their money, with low

cost financial services such as investments, fundraising and

banking, and help them borrow through CAF Bank and our

social investment arm CAF Venturesome so they can invest in

services for the future.

We aim continuously to improve our support for charities

and donors.

Driving growth and our impact: We significantly increased

both donations into CAF and donations out to charities

– more than £500m donated out to charities in one year

for the first time. Our generous donors have given more

than £600m, again a record, with many building up their

philanthropic capital for the future. We have built the

new CAF Investment Account to give charities access to

the biggest selection of charity-specific investment funds

online supporting charity investment. We have grown CAF

Bank’s lending to charities to more than £70m and we

have launched the CAF Resilience programme, a three year

pilot, backed by a major donor, to make a sustained and

meaningful impact on small and medium sized charities in

the UK.

Our international oQces in the United States, Canada,

India, Brazil, Russia, and Southern Africa remain strong,

facilitating cross-border giving and building civil society,

helping channel the rapid growth of fast-developing

economies to address social needs.

CAF’s campaigns team has been able to grow the global

#givingtuesday campaign in the UK, which asks people

to give money, time or their voice to charity at the start

of the Christmas shopping season, helping 1,600 charities

and businesses talk to new groups of people about their

favoured causes.

Accelerating digital capacity: We have launched the UK’s

first secure digital investment platform for charities, invested

further in Give As You Earn, the leading payroll giving service,

to make it easier for employees to sign up online and

encourage companies to unleash the potential of giving by

their employees. We continue to invest in our digital services

to make it easier for people to give in an online and

mobile world.

Customer service excellence: We have created new online

tools to help charities manage funding from CAF, introduced

new paperless systems to allow charities to receive money

more quickly and easily and strengthened the skills of our

staV to ensure we continue to allow our clients to give with

absolute confidence.

Quality and e;ciency: The quality of our services makes

it easy for major donors and household name companies

to give through CAF, knowing that we will safeguard their

charitable funds and fulfil their charitable aims eQciently and

eVectively. So for example, we have granted more than £1m

to search and rescue charities from a fund established by the

UK government in 2014.

Major donors

CAF is the UK’s largest provider of donor advised funds. CAF

Charitable Trusts allow people to donate money, shares or

property and invest in a philanthropic fund for the future.

We hold these donations and donate them on to charitable

causes in line with the philanthropist’s wishes.

We have seen exceptional growth in donations from our

private clients and a record year for donations into CAF

and donations out to charities. Overall, our private clients

donated £284m to CAF, up from £206m in 2015/16, and

granted out £177m to charities, up from £164m

in 2015/16.

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Donations from private clients greatly exceeded our

expectations for the year. We expect 2016/17 to be an

unusually generous year, with many clients accelerating

their planned giving to CAF Charitable Trusts this year,

building their philanthropic funds for the future buoyed by

stock market performance and increased engagement with

civil society.

Share giving is significantly up and many donors have built

up their philanthropic funds for the future. Donations to

charities are also buoyant, putting these funds to good use.

The projects and causes funded by CAF’s generous donors

are extraordinarily diverse, and we support them at every

stage of their philanthropic journey. From funding the

building work of a library for an overseas orphanage in

memory of a loved one, to funding a project to illuminate

bridges on the Thames in central London, our donors are

making a diVerence all over the world.

CAF American Donor Fund also enjoyed huge success,

growing substantially and helping hundreds of US and UK

citizens living on both sides of the Atlantic give to maximum

eVect, channelling £55.9m to charities around the world.

We also work to advise and help our donors achieve their

goals. From helping purchase a farm in Sussex to help

children at risk of exclusion, to helping purchase 11,600

hectares of wetlands in Argentina, we help our donors to

make a tangible diVerence to the causes they care about.

Regular givers

CAF is the largest provider of payroll giving, allowing

employees to give direct from their gross salaries to good

causes. Thousands of people also enjoy a CAF Charity

Account, a simple way of donating to a personal fund held

by CAF which we can donate on to charitable causes in line

with the donor’s wishes. We also help people plan to leave a

charitable legacy to the causes they care about.

CAF Charity Account and Give As You Earn donors are

enduring and hugely generous supporters of their chosen

causes, donating record sums to their favourite charities.

Donations paid to charities from

CAF Charity Accounts

2017 2016

Gift Aid funded £81m £74m

CAF Give As You Earn funded £31m £30m

£112m £104m

We were able to help our regular donors give a record £112m

to charities around the world from their CAF Charity Accounts

and through their payroll with CAF Give As You Earn. The

figure was up sharply on last year’s figure of £104m, and

above expectations, reflecting the decision of some of our

donors to donate from their CAF accounts and in line with

our mission to increase the flow of funds through CAF to

charitable causes. Donations into CAF Charity Accounts fell

slightly during the year, and we will focus on encouraging

donors to keep their accounts topped up so they are able to

give.

We achieved a six per cent increase in new accounts during

the year – we are working to make giving through CAF

appealing to new generations so we can maintain our long

track record of strong support to the charities we serve.

We rolled out new ways to sign up to payroll giving online,

making it easier than ever for companies to encourage their

employees and enable them to use this convenient and easy

way to give.

Companies

CAF works with thousands of companies, including many

of the largest firms in Britain and overseas. We help them

donate to good causes, help oVer convenient and eVective

ways for employees to give and oVer advice and consultancy,

helping them maximise their potential to have a positive

impact on society.

CAF has long and deep experience partnering with companies

to help improve corporate responsibility and enable thousands

of companies to give, supporting the work they do with

charities and communities, and helping them engage their

employees.

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In the corporate market we surpassed our expectations

during 2016/17 helping our company donors give more

than £98m to charities, up from £76m during the

previous year.

CAF has continued to support thousands of companies

to enable them to give to charities and engage their

employees. We have worked with many of our clients to

develop new, ambitious initiatives to fund charities as well

as oVer them and their employees a more

digital experience.

CAF was the first to announce a payroll giving scheme in

the UK in 1987 and this year we celebrated 30 years of

payroll giving. During this time we have helped employees

give around £1.3 billion to charity through their salaries and

continue to deliver a market leading scheme.

Strong competition in donation management services

continues to be a challenge, with the growth of technology

platforms. However, we continue to innovate and provide

new ways for businesses to engage with charities from

encouraging them to get involved in #givingtuesday to

developing a new giving vehicle, CAF Partnership Account,

which allows LLPs to continue to give to their favourite

charities whilst fulfilling the new Gift Aid rules from HMRC.

We are very proud to have worked with many of the major

supermarket chains, including Aldi, Marks and Spencer,

Sainsbury’s and The Cooperative Group to help them donate

£14m in plastic bag levies to local and national charities.

We helped roll out national community programmes for

major retailers such as The Local Community Fund for The

Cooperative Group, which distributed £9m to 4,000 charities

across the UK. In addition to distributing the plastic bag levy

funds, we supported Marks and Spencer’s Sparks Card charity

element, which donates 1p to one of ten national charities

every time a Sparks member shops with them and scans their

card. We were also able to support in-store fundraising for a

number of supermarkets and high street retailers, including

Sainsbury’s Comic Relief campaign.

Charities

Helping charities make the most of their scare resources

and invest in the future is a key plank of CAF’s work. We

oVer a wide range of financial services specifically tailored

to charities – banking, savings and loans through CAF Bank,

the new CAF Investment Account and our leading online

fundraising service CAF Donate – run by the sector for

the sector.

We fulfilled our plans to launch the new CAF Investment

Account last autumn and are making steady progress bringing

charities onto this new platform. Our CAF Donate online

fundraising service grew by 10 per cent over the year, achieving

an additional £2.3m to charities, again slightly above

our expectations.

A fast growing area is our grantmaking and charity advisory

work, working with funders to distribute funds to good causes,

and oVering consultancy services to charities on strategy

and fundraising.

CAF has provided expert strategic advice to various charities,

and designs major grant-making programmes on behalf of

charities, foundations and government.

Throughout the year our priority has been to oVer charities low

cost services that oVer a good return, something thrown into

particular relief by the Bank of England’s decision to halve base

rates during the year.

We have sought out competitive rates in the market for our

fixed term deposit accounts, and launched our class-leading

investment account for charities, giving charities access

to a wide range of sector-specific investment funds in one

place online for the first time. Our social investment arm

CAF Venturesome faces increased competition from state

aid assisted funds but marked its 500th deal, underlining its

position as a pioneer in social investment.

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CAF Bank

CAF Bank occupies a uniquely important position in the charity

world – a bank for charities, wholly owned by a charity. As

a bank owned by a charity and run for charities, CAF Bank

supports customers to deliver social impact and achieve a fairer

society by providing an ethical and fair approach to banking

and oVering straightforward and transparent services that

customers understand and trust.

CAF Bank continues to oVer a reliable and secure home for

charities’ money, keeping its services as low cost as possible

in the current economic climate. CAF Bank’s mission is to

provide security in diQcult times, so we are acutely aware of

the pressures on charities and we do all we can to maintain

our rates and keep fees as low as possible.

As well as oVering full service banking to 15,900 charities,

we aimed to increase lending to charities and our lending

has grown in line with our plans from £46m to £72m with

a further £14m of loans and overdrafts committed but

not yet drawn at the end of the year. It has been a great

achievement to grow lending to this level in just four years,

helping charities develop everything from social housing to

drug rehabilitation schemes and is in line with our plans to

grow lending to charity over the medium term.

International

CAF’s Global Alliance is a unique international network of

organisations across nine countries, working to build civil

society and catalyse domestic philanthropy in fast growing

economies and provide infrastructure for cross-border giving

around the globe.

The CAF Global Alliance continues to play a hugely important

role in building philanthropy and strengthening civil society

around the world. Globally, the climate for civil society is under

increasing pressure. The CAF Global Alliance strengthens the

sector through capacity building initiatives, growing cross-

border philanthropy and catalysing domestic mass market

giving. For cross-border giving, CAF America continues

to outperform expectations, climbing the tables of US

foundations, rising 30 places to 271 of 1.2m foundations.

Donations from CAF America to charities were £28.7m, up

from £18.6m in 2015/16. CAF Canada, although young, is

exceeding expectations and making a mark as a leading player

in cross-border giving. CAF American Donor Fund continues to

play a powerful role in eVective international philanthropy with

£55.9m given to charities, up from £29.4m in 2015/16, again

exceeding expectations and highlighting the potential power

of cross-border giving.

CAF Russia led #givingtuesday, in Russia for the first

time, working with 900 partners and covering 124 cities

and increasing donations by 250%, greatly exceeding

our expectations for the campaign’s first year in Russia.

CAF India exceeded expectations for the year, although

economic and political conditions in South Africa and Brazil

remain a challenge. IDIS, our Brazilian partner launched

the country’s Giving Pledge with the backing of a leading

Brazilian philanthropist, urging individuals to commit

30% of their wealth to charities. CAF India’s work with the

corporate sector has been recognised by the government,

being asked to advise on India’s national CSR standards.

And CAF Southern Africa continues to play a vital role in

convening civil society to engage with the government to

ensure proposed legislation does not impact negatively on

the sector.

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Sector support

CAF is a leading voice with the charity sector. We provide

policy, insight and analysis to support charities, highlight

their importance and nurture a positive environment in

which they can thrive, both in the UK and around the world.

Our policy team’s work with charities, government and

regulators across the world helped secure revisions to the

Financial Action Task Force (FATF) revised recommendations

on charities’ access to financial services, meeting our aim

to improve the regulatory environment for civil society

worldwide. The team continues to build CAF’s profile as a

thought leader through our Giving Thought think tank and

Future World Giving policy programme. This has included

pioneering papers on the opportunities presented to charities

through new technology like blockchain, and how companies

are working to protect civil society.

UK Giving, our long-running survey into people’s giving

behaviour, is now being used to give charities monthly

insight into patterns of charitable giving, contributing to our

goal of ensuring our research is widely used to help charities

plan. Our flagship World Giving Index continues to garner

more media coverage every year, significantly driving up

public awareness of CAF. Last year’s version of the report

generated media coverage in 70 countries. Our research

team also worked with Acevo to produce the annual Social

Landscape report, the leading survey of charity chief

executives.

The #givingtuesday campaign, which CAF brought to the

UK in 2014 continues to go from strength-to-strength. We

aimed to increase the number of partner organisations

and also to encourage companies to use the campaign to

encourage giving among their customers, a trend we are

seeing develop as the campaign matures.

Last year we brought together a record 1,600 charities and

businesses to take part in the global day of giving. Around

one in ten UK adults took part by doing something in support

of a good cause on the day and public awareness was also

up, reflecting our aim to raise the profile of charities and

encouraging people to give.

Our media team has significantly increased CAF’s profile

– with coverage up in national, trade and international

media, again reflecting our aim to encourage giving and

build trust in charities. In addition to promoting our policy

and campaigns, we have secured coverage of the new

CAF Investment Account, the 30th anniversary of Give As

You Earn and CAF Charity Accounts. We also helped lead a

coalition of charities and sector bodies which secured a day

of BBC coverage about the value of charities earlier this year.

CAF’s advisory team launched the CAF Resilience programme

to enhance charity resilience and promote giving, with the

numbers of charities applying to be involved exceeding our

expectations. The team will now working with ten smaller

charities to help strengthen their long term organisational

health so they can continue delivering vital services for their

communities.

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PLANS FOR THE FUTURECAF exists to realise the potential of giving. To facilitate

donations to charity, help non-profit organisations do more

and create the conditions in which civil society can thrive.

We always aim to increase the money we can send to

charities from our generous donors, grow our financial

services for charities and keep our fees and charges as low

as possible to ensure that the maximum resources reach

charities at the front line.

Driving growth and impact

We aim to increase the donations we receive from supporters

and pass on to charities. Whilst the overall donations from

CAF clients varies from year to year depending on economic

conditions, and is often influenced by very large donations,

we aim to continue an upward trend in donations both into

CAF and out to the charities we support over time.

As a charity which pays its own way by oVering services,

the economy continues to be a challenge, particularly with

interest rates cut to a historic low. CAF’s objective as always

is to remain strong, keep fees and charges low and take

mitigating action where it is possible so we can oVer the

maximum support to the charities we serve.

We aim to deliver continuing improvements in our customer

service and eQciency – making it ever easier to give, safely

and securely.

We also aim to increase the eVectiveness of our financial

services for charities – helping more and more charities to

make use of our innovative investment account, lending

more to help charities invest in services and new income

streams, and increasing the social investment we can make

in innovative and fast-growing charities and

social enterprises.

At the same time we aim to increase CAF’s influence for

good. Building our capacity across advisory, research, policy

and media work, both here and around the world, is critical

to our success. We are pressing hard for governments in

the UK and around the world to recognise the potential of

a vast army of donors in emerging economies around the

world and to put in place the infrastructure to build the

conditions and trust needed for giving to grow.

Our advisory capacity is growing and we are building our

grantmaking work – using CAF’s skills, experience and

expertise to help distribute philanthropic funds, regulatory

fines and other major grants to good causes everywhere.

We will also grow our cross-border giving services,

recognising real demand from people to maximise the value

of their donations to causes they care about wherever in

the world they may be. Whether they are American citizens

in London, people who work in more than one country or

those who want to give back to the land of their ancestors,

we want to help them achieve their philanthropic goals.

We want to increase our international reach, proactively

looking to grow the geographical footprint of the CAF

Global Alliance and expand opportunities to increase giving

in countries as they develop and grow.

Accelerate digital capability

With online and mobile technology all-pervasive, CAF’s aim is

to become a digital organisation that embraces technology

to make giving easier and more accessible. We will complete

our web upgrade, ensuring our services are online and mobile

compatible and streamline our services to ensure we remove

red tape and provide a reliable, easy to use service.

We are investing in further enhancements to the online CAF

Investment Account, and rolling out improvements to our

digital services.

Security and safety are our top priority and we are

continuously reviewing and upgrading our defences in

order to keep our clients safe and are rolling out new digital

services to allow charities and donors to benefit from

our insight, expertise and research so they can fulfil their

charitable aims.

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Customer service excellence

Our customer service teams are committed to helping our

clients fulfil their charitable goals whatever they may be. We

are investing in training so our people can better serve our

clients, reviewing our customer journeys so we can make

it ever easier to give through CAF and ensure our financial

services are simple, clear and eQcient.

We are updating our processes to reflect the needs of

the world around us and ensure we meet the needs and

expectations of our customers.

CAF aims to deliver continuous improvement in the service

we provide and build on our long track record of exemplary

customer service. Our online services complement the personal

and friendly service on which we pride ourselves.

While we transform our customer-facing services, we are

working to transform our back oQce systems to ensure we

always deliver the right result for charities and donors.

One of CAF’s strengths is the ability to send funds to tens

of thousands of charities and allow donors to give safely to

organisations across the globe, despite the ever increasing

burdens of regulation, both here and internationally. As one

of the country’s largest funders of charity we also constantly

review the way we validate charities, so donors can give with

absolute confidence and we can ensure as many charities as

possible can benefit from funding.

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Donations

& legacies

received

Donations

paid to

charities

2017

£m

2016

£m

2017

£m

201

£m

Restricted funds per Group Statement of Financial Activities (SOFA) 553.0 462.9 480.7 401.8

Donor client balances (note 18 to the Financial Statements) 94.9 99.1 58.4 60.6

less: CAF Give As You Earn receipts transferred to restricted funds

and included in the Group SOFA(36.9) (38.5) - -

58.0 60.6 58.4 60.6

611.0 523.5 539.1 462.4

FINANCIAL REVIEW

Overview of the year

The CAF group’s finances encompass unrestricted, restricted

and endowment charitable funds, together with CAF Bank

depositor balances and other donor client balances.

Restricted charitable funds and CAF Bank depositor

balances form the majority of our balances and activities.

The restricted funds principally relate to the services we

provide to donors through CAF Charitable Trusts, CAF

Charity Accounts, CAF Company Accounts, CAF American

Donor Fund and CAF America.

For the first time in 2016/17 donations paid out to charities

from our donor funds exceeded £500m. Also for the first

time, donations and legacies received from our donors

exceeded £600m.

Key financial events

During the year broader uncertainties arose as a result

of the EU referendum (Brexit) and the US election, which

came against a background of an already weak economic

recovery. Despite this our donors’ continuing generosity

ensured that overall giving increased and consequently

the group’s unrestricted, restricted funds and depositors’

balances grew during the year. Total charitable funds

increased from £1,119m to £1,285m. Significant events

which have impacted CAF’s financial results in the

year include:

receiving £4.8m of legacy income into

unrestricted funds;

completing our withdrawal from a multi-employer

defined benefit pension plan, closing oV a previously

uncapped exposure to orphaned liabilities;

continued growth of CAF Bank’s lending to charities;

launch of the UK’s first online digital investment

platform for charities; and

continued investment in digital services.

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Unrestricted funds

Group unrestricted funds increased by £5.3m (2016: £2.1m)

over the year from £54.9m to £60.2m. In respect of normal

day-to-day operating activities total income exceeded

total expenditure by £3.3m (2016: £0.1m). Group income

particularly benefitted from an exceptional level of legacy

income of £4.8m (2016: £0.6m), an increase in fee income

in CAF America and an increase in CAF Bank’s fee income

and net interest income as a result of growth in lending and

slightly improved yields on its investment portfolio. Gains

on investments of £1.8m (2016: nil) arose during the year,

including one-oV realised gains of £1.5m on the disposal

of our bond portfolio as part of an exercise to realign our

treasury position.

CAF and the group continued to be impacted by low

interest rates. As a consequence we continued to tightly

control costs across the organisation, although additional

costs were incurred to address increased regulatory

requirements and also to make upgrades to our IT

infrastructure and systems.

Restricted and endowment funds

The CAF group received £565.8m into restricted and

endowment funds from individual and company donors in

the year by way of donations and investment income and

donated £480.7m to other charities in the same period

(2016: £473.5m and £401.8m respectively).

Income from donations and legacies grew from £462.9m to

£553.0m. Although we saw giving to CAF from companies

and regular givers reduce slightly, there were significant

increases in giving from major donors into CAF Charitable

Trusts as they sought to build up their philanthropic funds.

While many major donors used CAF to build their fund for

the future, donations to charities from CAF and the group

increased across the range of our activities. Donations to

charitable causes around the world through CAF American

Donor Fund increased from £29.4m to £55.9m. Despite

the slight reduction in giving to CAF from companies and

regular givers, we saw donations paid from CAF on behalf

of companies increase by £26.5m to £98.2m and regular

givers gave £111.6m compared with £103.7m in 2015/16.

The growth in UK investment markets has resulted in

investment gains of £75.4m arising in the year (2016:

losses of £14.8m), providing additional philanthropic

capital for our major donors’ funds. These investment

gains, together with an increased level of donations, have

contributed to a net increase of £160.4m in total group

restricted and endowment funds, which stood at £1,224.8m

at 30 April 2017 (2016: £1,064.4m),

Endowments of £2.3m (2016: £2.1m) consist of two funds

used to support the development of a charitable giving

culture in Russia.

Depositor and donor client balances

Depositor and donor client balances principally consist

of the assets and liabilities of CAF Bank. At 30 April 2017

CAF Bank depositors’ balances stood at £1,002.1m (2016:

£1,000.1m), while donor client balances in respect of

payroll giving through Give As You Earn together with those

held for CAF Donate, our donation administration service

for charities, stood at £6.3m (2016: £6.8m)

During the year CAF Bank continued to transition from a

deposit taker into a more diversified bank with a growing

lending book and continued to build a small base of

personal customers.

17

CAF Bank benefits from a long term loyal base of charity

deposit customers who provide a strong and stable source

of funds, enabling loans to be advanced to other charities

at competitive rates. CAF Bank’s lending grew as planned

during the year, driven by demand from charities for

funds to enable them to grow their impact. Loans drawn

at 30 April 2017, net of repayments and provisions were

£71.7m (2016: £45.6m), with a further £14m of loans and

overdrafts committed but not yet drawn at the end of

the year.

As for CAF itself, CAF Bank continued to be impacted by low

interest rates, which are expected to remain at relatively low

levels for the foreseeable future. Given the outlook, and the

need to cover operating costs, CAF Bank took the diQcult

decision to introduce a £5 monthly charge to all charity

customers in November 2016, complementing the

£25/month charge to personal customers.

CAF Bank reported a profit on ordinary activities before

taxation of £4.1m in 2016/17, an increase of £0.4m on

2015/16. It benefitted from growth in lending and slightly

improved yields on its investment portfolio, while costs were

impacted by additional staV to satisfy increased regulatory

requirements and IT costs to upgrade infrastructure and

payment systems. CAF Bank’s profits are gifted to CAF to

support its charitable actvities.

Reserves policy

CAF’s policy is to maintain, but not exceed, an appropriate

level of reserves to support the activities of the group,

taking into account the risks to which the group is exposed,

existing and projected future levels of income and

expenditure and the capital requirements of its

regulated subsidiaries.

The policy and determination of the required level of

reserves are set in accordance with Charity Commission

guidelines and are reviewed at least annually by Trustees.

In determining the appropriate level of reserves, Trustees

consider the nature of the group’s activities and the risks

inherent in our financially based activities including credit

risk, liquidity risk and interest rate risk, along with other risks

to which CAF and the group are exposed.

They also consider future capital requirements and changes

in our operating environment, including regulatory changes,

that may also impact the level of retained reserves or the

levels of reserves we are required to maintain in the future.

Group unrestricted funds, which also represent free reserves,

stood at £60.2m at 30 April 2017, an increase of £5.3m

during the financial year. This level of reserves at 30 April

2017 is considered to be suQcient to support the ongoing

activities and development of the group.

Our objective is to remain strong, keep our fees and charges

low and take mitigating action where it is possible, so

we can oVer the maximum support to the charities and

donors we serve. We, therefore, continue to take a cautious

approach to the levels of capital maintained. Through

regular reviews, we will continue to monitor our reserves

position closely to ensure an adequate level is maintained

to support the activities and development of the group.

18

CAF investment policies and performance

CAF adopts investment policies appropriate to the nature

of the funds for which the investments are held. The policies

include consideration of liquidity requirements, credit and

interest rate risk, yield and diversification. The Investment

Advisory Committee reviews our investment policies and

performance on behalf of the Trustees.

CAF continues to be extremely cautious in the current financial

climate, only placing funds, over which it has discretion, with

UK and global banks.

Unrestricted funds – Wholesale treasury assets

Unrestricted funds are used to support the operating

activities of the CAF group, including long leasehold premises

used for the group’s activities. During 2016/17 funds were

invested primarily in term deposits with UK banks, but

may from time-to-time be invested in gilts, multilateral

development bank bonds and in a small value of highly-rated

corporate bonds.

Restricted funds

Investments are held for restricted funds as follows:

Financial investments – Trust funds

Investments held for major donors in CAF Charitable Trusts,

CAF America Donor Advised Funds and CAF American

Donor Fund Trusts (collectively ‘Trust funds’) are aligned with

the charitable objectives of each donor where these are

available. As a result, this portfolio consists of a broad range

of investments often held over the longer term, comprising

pooled investment funds, equities, bonds and cash deposits.

Performance is measured against an appropriate benchmark

taking into account the objectives of the donor, where this

has been agreed.

Other restricted funds – Wholesale treasury assets

Other restricted funds principally comprise balances

held pending onward donation to other charities and

are invested in term deposits with UK banks and in gilts,

multilateral development bank bonds and corporate bonds.

In June 2016 CAF disposed of its portfolio of gilts and

bonds and realised a gain of £1.5m.

While yields from term deposits remained above yields

on gilts and bonds through the remainder of 2016/17, no

further investment in gilts and bonds was made during

the year.

Our yield for the year ended 30 April 2017 was 1.27%

(2016: 1.45%). We continued to benefit from higher rates

on longer term deposits, but we expect this performance

to fall away further in the future. On our bond and gilt

portfolio the total return for the year ended 30 April 2017

was 2.21% (2016: 2.21%).

Investment policies of subsidiary and associated companies

and trusts are determined and managed by their respective

boards. Details of these policies are set out in the report and

financial statements of each entity.

Going concern

In order to assess the appropriateness of the going concern

assumption basis, the Trustees have considered the group’s

financial position, reserves and forecasts for the foreseeable

future. They have considered the assumptions underlying

those forecasts and the impact of the potential risks

aVecting them.

Having made those enquiries, the Trustees have a

reasonable expectation that the group will be able to

continue in operation and meet its liabilities as they fall

due for at least twelve months from the date of signing this

report. For this reason, they continue to adopt the going

concern basis in preparing the financial statements.

19

The Charities Aid Foundation is a registered charity (number

268369) and is governed by a Declaration of Trust dated 2

October 1974 (as amended from time to time). The Board

of Trustees, together with the executive are set out at the

end of this document.

CAF Trustees

The Board of Trustees is the body responsible for the

management of CAF and is required to consist of:

Not less than eight Trustees appointed by resolution of

the Trustees; and

the Chairman of NCVO

The Board meets at least five times a year. All Trustees are

non-executive and none of them receives remuneration

from CAF. Trustees are appointed to hold oQce for a term of

three years. Except for the Chairman of NCVO, no Trustee

may hold oQce for more than three consecutive terms.

Newly appointed Trustees undertake a series of meetings

with CAF’s senior management, which ensures that they

gain a full understanding of CAF and their responsibilities.

Board of Trustees

1 May 2016 to 30 April 2017

Total no. of

meetings attended

during 2016/17

Dominic Casserley (Chairman) 6/6

Saphieh Ashtiany (Vice Chair) 4/6

Stuart Barnett (Chair, Audit, Risk and

Compliance Committee)5/6

Robin Creswell (Chair, Investment

Advisory Committee)5/6

Matt Hammerstein 4/6

Alison Hutchinson - resigned

December 20163/4

Peter Kellner (current Chair, NCVO) -

appointed November 20162/2

Tiina Lee 5/6

Sir Martyn Lewis (former Chair, NCVO) -

stood down November 20162/3

Stephen Lovegrove - term ended

September 20160/3

Carole Machell - appointed

February 20171/1

Iain MacKinnon (Chair, CAF Bank Limited) 5/6

Dr Julie Maxton 4/6

Roger Perkin - appointed April 2017 0/0

Janet Pope - appointed February 2017 1/1

Susannah Storey - appointed

February 20171/1

STRUCTURE, GOVERNANCE AND MANAGEMENT

Audit, Risk and Compliance Committee

The Audit, Risk and Compliance Committee consists of

Trustees and co-opted members with relevant expertise.

The committee meets with senior management and the

external auditors at least four times a year. The committee’s

purpose is to review and make recommendations on the

following on behalf of the Trustees:

Internal control and risk management systems

EVectiveness of internal audit

CAF’s relationship with its external auditors

Procedures for compliance with anti-money laundering

legislation and CAF’s other regulatory obligations

Annual report and accounts

The arrangement by which staV may, in confidence,

raise concerns about possible improprieties in financial

reporting or other matters

The Trustees delegate management responsibilities to the

Chief Executive and also delegate certain functions to the

sub-committees described below. Each sub-committee

has specific terms of reference and a chairman appointed

by the Trustees. Trustees strengthen the sub-committees

by co-opting experts in the relevant field. This delegation

is controlled by requiring regular reporting from the Chief

Executive and the sub-committees to the Board of Trustees.

20

During the year the committee reviewed the

arrangements for external and internal audit and made

recommendations, which were accepted by the Trustees, to

appoint Deloitte LLP as external auditor and for Mazars LLP

to provide internal audit services.

Investment Advisory Committee

The Investment Advisory Committee is a panel of

independent investment experts chaired by a Trustee. The

committee meets with senior management at least four

times a year. The purpose of the committee is to advise the

Trustees on investment matters regarding CAF’s funds as

well as the funds held in CAF Charitable Trusts or as agent.

This is undertaken in the context of our long range strategic

plans, operational activities and Charity Commission

guidelines. The committee monitors compliance with

agreed investment policies and performance benchmarks.

It also monitors compliance with procedures relating to

investments, as well as providing other advice on an ad

hoc basis.

Nominations and Remuneration Committee

The Nominations and Remuneration Committee advises

the Trustees on the appointment of CAF’s Trustees and

of the co-opted members and advisers to the boards and

committees of the CAF group. The committee also makes

recommendations regarding the remuneration of members

of the Executive Committee of CAF (who form the key

management personnel of the group) and other senior

members of staV, and reviews and agrees the basis for the

general pay award to staV. Remuneration and salaries are

assessed and reviewed against market rates using third-

party data. The committee also reviews the general terms

and conditions of employment of our staV including the

provision of pension arrangements. The committee meets

at least three times a year.

The CAF family

CAF is a group of wholly owned entities together with

aQliated organisations which exist to provide our broad

range of services to donors and charities and support our

work to build civil society around the world.

In the UK, CAF owns a number of subsidiaries, the largest

of which is CAF Bank, which exists to provide banking

services to charities. CAF has also built the CAF Global

Alliance which comprises UK and overseas charitable

entities, including CAF’s subsidiaries and branches CAF

American Donor Fund, CAF America, CAF Canada and CAF

Russia. The CAF Global Alliance also includes a range of

independent organisations including BCause (Bulgaria),

Good2Give (Australia), CAF India, CAF Southern Africa and

IDIS Brazil.

CAF’s Board of Trustees regularly receives updates from the

boards of each entity which is a member of the CAF group.

Full details of the CAF group are set out in note 2 to the

financial statements.

Relationships with other charities

We have links with a large number of charities through the

provision of financial and administration services, as well

as with our founder, NCVO. CAF has an ongoing annual

obligation to collect charitable contributions on behalf of

NCVO, under which £2.07m (2016: £1.98m) was paid to

NCVO during the year.

CAF’s purpose (as set out in the Declaration of Trust) is

to raise money and hold funds ‘for the benefit of such

charitable institutions or such charitable purposes as the

Trustees shall think fit’. The activities and objectives arising

from the pursuit of our mission are described throughout

this report. CAF’s purpose and its activities contribute to

the public benefit by creating value for other charities and

helping to shape the charitable sector.

CAF has paid due regard to the Charity Commission’s

general guidance on public benefit when reviewing its aims

and objectives and in planning its future activities.

21

Risk management framework

The group operates a framework that provides oversight

and accountability for the management of risk across all risk

types and at all levels of the group.

Risk is managed by the Trustees, Executive Committee and

relevant boards and committees. The control environment

is designed around a risk management framework, and

a related set of policies which facilitate the taking of

acceptable risks within the appetite of the group, as set by

the Trustees and relevant boards.

Identifying and monitoring current and emerging risks is

integral to the group’s approach to risk management. The

group’s Risk Management Framework includes three

key elements:

through the implementation of policies, systems and

controls, the group identifies, assesses, mitigates and

manages its risks;

the risk and compliance functions challenge, monitor,

guide and support the management of risk

exposure; and

independent assurance is provided by the internal

audit function, which performs a risk-based programme

of audits and reports on risk and control matters to

the Executive Committee, Audit Risk and Compliance

Committee (ARCC) or the CAF Bank Audit Committee

and Risk and Compliance Committee.

The main risk categories to which the group has exposure are:

Financial risks

Through such services as the CAF Charity Account, CAF

Company Account and CAF Charitable Trust, the group’s

activities include the receipt, investment and onward

distribution of charitable funds. Activities also include the

banking services, such as deposit taking and lending provided

by CAF Bank. Consequently, the group holds a significant level

of financial instruments and has a corresponding exposure to

the associated financial risks.

Details of the financial instruments held by CAF Bank are

set out in note 31 to the financial statements, together with

descriptions of the management of each category of

financial risk.

RISK MANAGEMENT

Non-financial risks

Strategic and capital risk

Regulatory risk

Operational risk

Cyber risk

Reputational risk

Financial risks

Credit risk

Liquidity and

funding risk

Market and

interest rate risk

22

Credit risk

Credit risk is the risk of financial loss arising from a borrower

or counterparty failing to meet their financial obligations to

repay the group in accordance with agreed terms. Credit risk

arises primarily from investing funds with wholesale treasury

counterparties and lending to charities and

personal customers.

Wholesale treasury assets

Wholesale treasury policies are reviewed and approved by

the CAF Investment Advisory Committee and CAF Bank’s

Executive Risk Committee. The boards of group entities set

criteria which include credit rating and counterparty lending

limits, group exposures and country limits.

Loans and advances are made to major banks and to the

Bank of England. Counterparties and exposure limits are

reviewed by the CAF Investment Advisory Committee and

CAF Bank Asset and Liability Committee (ALCO).

Financial investments held for Trust funds

CAF Charitable Trusts, CAF America Donor Advised Funds and

CAF American Donor Fund Trusts (collectively ‘Trust funds’)

are invested in accordance with policies approved by the

CAF Investment Advisory Committee on behalf of CAF’s and

CAF American Donor Fund’s Trustees and the board of CAF

America. Donors typically hold a proportion of their funds in

cash in order to meet their short-term giving expectations

and invest funds to meet their medium to long-term

philanthropic objectives. Donors plan donations by reference

to the market values and liquidity profile of the assets held for

their trust fund.

The exposure to credit risk is also mitigated by directly

investing only in liquid debt securities and with counterparties

having a credit rating at purchase of at least A-/A3 from

Moody’s/Fitch/S&P ratings.

Cash held for Trust funds by investment managers pending

investment is subject to the FCA’s client money rules and

must be held only at banks within approved credit policy.

Lending and programme related investments

There are two principal streams of lending activity: CAF Bank

and CAF Venturesome.

CAF Bank has in place a system of limits and controls to

manage credit risk on its loan portfolio. Loan applications

are reviewed by a credit assessment team and presented for

approval to the Sanctions Committee, a sub-committee of

the Credit Committee, in accordance with policies and criteria

approved by the CAF Bank board. CAF Bank lending is secured

on property and subject to maximum limits on loan to

value ratios.

CAF Bank’s lending policies include maximum exposure values

and limits to manage concentration risk by sector. Exposure to

geographical area is monitored.

CAF Bank’s loans, overdrafts and BACS facilities are subject to

regular monitoring of loan performance and individual annual

review. Administration of the loan book is outsourced to Capita

Mortgage Services Ltd who provide regular management

information on a loan-by-loan and aggregated basis.

CAF Venturesome’s programme-related investments enable

charities to lever their operations, and deliver more

social impact.

All loans are subject to regular monitoring of loan performance.

Provisions are assessed on a loan-by-loan basis and where

appropriate, includes consideration of the impact of a

reduction in property values of various degrees of severity.

23

Liquidity and funding risk

Liquidity risk is the risk that a group entity does not have

suQcient financial resources to meet its obligations as they fall

due, or can secure them only at excessive cost. Liquidity risk

arises from mismatches in the timing of cash flows. Funding risk

arises when the liquidity needed to fund illiquid asset positions

cannot be obtained at the expected terms and when required.

Wholesale treasury assets

Liquidity and funding risk is measured and monitored against

daily limits and for CAF Bank against intra-day triggers. The

liquidity position is monitored by the CAF Investment Advisory

Committee and for CAF Bank by its ALCO and Executive Risk

Committee. CAF Bank undertakes regular stress testing of its

liquidity position and behavioural analysis of its liabilities

and assets.

Financial investments held for Trust funds

Trust funds are invested at the discretion of donors

in accordance with investment policies which require

investments to be highly liquid. Investments by donors take

into account anticipated liquidity requirements to fund

donations. Should additional liquidity be required to fund

donations, investments are disposed. In the event of a

shortfall in anticipated proceeds, the value of the donation

would be reduced.

Market and interest rate risk

Market and interest rate risk is the risk from adverse

movements in external markets, e.g. interest rate movements,

changes in investment values or currency movements that will

reduce income or the value of assets. This includes interest rate

risk in CAF Bank’s banking book which is the risk arising from a

mismatch between the duration of assets and liabilities.

Wholesale treasury assets

Neither CAF nor CAF Bank undertake proprietary trading

activities. Investments are usually held to maturity and valued

at cost with any premium or discount amortised over the

remaining term (the eVective interest method).

Market and interest rate risk is measured by monitoring

mismatches between assets and liabilities assessed on a

behavioural basis, which may result from movements in

market interest rates over a specified time period within limits

approved by the boards of group entities.

Financial investments held for Trust funds

Trust funds are invested to fund long term philanthropic goals

of donors. The value of investments determines the value of

funds available to make donations. Accordingly, a movement

in equity markets or interest rates may aVect the value of

Trust funds held by the group, but does not impact the level of

unrestricted funds.

24

Strategic and capital risk

Strategic risks are those that arise from the decisions taken

concerning the group’s objectives and ability to meet those

objectives. Business risks derive from the decisions taken in

relation to developing and sustaining products and services,

the attendant economic risks concerning income and costs,

and associated risk arising from change in the technological

environment for those products and services. Non-business

risks arise out of the longer term sources of finance.

Capital risk is the risk that the group or some of its entities

do not have the amount and/or quality of reserves needed

to meet the requirement of the entities reserves policy or the

minimum regulatory requirements or to support planned

strategic growth.

The group’s principal risk exposure is to financial risks and

consequently changes in the financial markets have the

potential to have a significant impact on our strategic plans.

Our strategic planning includes the modelling of a range

of potential future scenarios in respect of changes in the

group’s operating environment, through which we identify

opportunities for the furtherance of our strategic goals or

for the mitigation of any negative impact arising from the

change in the operating environment.

The risks of short term economic downturn and a

continuing low or negative interest rate environment are

modelled. Similarly, the risk of inflationary pressures and

higher interest rates in the medium term are considered.

Changes in our operating environment, including regulatory

changes, may also impact the level of our retained reserves

or the levels of reserves we are required to maintain in

the future. Our planning processes include comparison of

projected reserves against the minimum level of reserves

required to support our ongoing operations and planned

strategic growth.

During 2015/16 we raised £20m (before costs) through

the issue of the CAF Retail Charity Bond, this is enabling us

to increase CAF Bank’s capital in order to support planned

growth in the bank’s lending to charities and facilitate

planned enhancements to our services for donors and

charities.

The risks to CAF’s strategy arising out of the planned exit

of the UK from the EU (Brexit) continue to be assessed

and monitored, including the future of EU funding for

charitable work, the longer term sustainability of corporate

social responsibility programmes, the future of tax relief

arrangements for donations into or out of the EU, and the

future of London as a global hub for philanthropy. CAF does

not receive any direct EU funding.

Regulatory risk

Regulatory risk is defined as the risk to earnings and

reputation associated with a failure to comply with

regulatory requirements and expectations. The group aims

to comply with all regulatory requirements to minimise the

risk of financial loss, maintain its high reputation and avoid

regulatory sanction.

CAF is regulated by the Charity Commission for England

and Wales and is also required to comply with tax

legislation for which HM Revenue & Customs is responsible

for ensuring adherence. CAF is responsible for ensuring

that the charitable funds which it receives, administers

and distributes are managed in compliance with charity

law and the tax legislation relevant to charitable giving

and expenditure. CAF Bank is regulated in the UK by the

Financial Conduct Authority (FCA) and the Prudential

Regulation Authority. CAF Financial Solutions Limited is

regulated in the UK by the FCA.

25

Compliance with regulatory requirements and expectations

commences at board level for each group entity, is cascaded

down through the senior management teams and is

embedded across all areas of operation through the Risk and

Compliance teams.

The group is committed to ensure that the appropriate

resource is made available to adhere to regulatory

requirements, albeit in a proportionate way.

Operational risk

Operational risk is the risk of financial loss resulting from

inadequate or failed internal processes, people and systems,

or from external events.

The group continues to develop systems and controls to

increase the probability of success and reduce the likelihood

of failure associated with operational risks. Policies

and practices are in place to address and mitigate our

operational risks, the reporting of which will be enhanced on

a continuous improvement basis.

Key operational risks monitored by the group include

exposure of group entities and their customers to financial

crime, including money laundering. Customer and

beneficiary reviews, including at advanced levels where

required, are undertaken in line with best practice, anti-

money laundering, prevention of terrorist financing and HM

Revenue & Customs requirements.

CAF Bank uses the Basic Indicator Approach to allocate

capital to operational risk exposures.

Cyber risk

Cyber threats are escalating from an increasingly

sophisticated criminal community and we continue to

invest in strengthening defences for both the group and its

customers and in developing emergency response plans.

We continue to respond to the need to ensure resilience,

to layer up security measures and to build capacity as our

operating model and volumes develop.

Reputational risk

Reputational risk is the risk of an adverse event resulting

in damage to the group’s and/or any of its subsidiaries’

reputation, leading to lost revenue or increased operating,

capital or regulatory costs.

The group’s standing in the eyes of its donors, customers,

beneficiaries, charity sector and the general public is of

critical importance to us. Reputational risk arises as a

consequence of the other types of risk described above, and

as such potential reputational impact is an integral part of

assessing and managing those risks.

26

The Trustees are responsible for preparing the Trustees’

Annual Report and the financial statements in accordance

with applicable law and United Kingdom Accounting

Standards (United Kingdom Generally Accepted Accounting

Practice), including FRS 102 “The Financial Reporting

Standard applicable in the UK and Republic of Ireland”.

The law applicable to charities in England and Wales

requires the Trustees to prepare financial statements for

each financial year which give a true and fair view of the

state of aVairs of the group and the charity and of the

incoming resources and application of resources of the

group and the charity for that period. In preparing these

financial statements, the trustees are required to:

select suitable accounting policies and then apply

them consistently;

observe the methods and principles in the

Charities SORP;

make judgments and estimates that are reasonable

and prudent;

state whether applicable accounting standards have

been followed, subject to any material departures

disclosed and explained in the financial statements; and

prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

charity will continue in business.

The Trustees are responsible for keeping proper accounting

records that disclose with reasonable accuracy at any time the

financial position of the charity and enable them to ensure

that the financial statements comply with the Charities Act

2011, the Charity (Accounts and Reports) Regulations 2008

and the provisions of the trust deed. They are also responsible

for safeguarding the assets of the charity and hence for taking

reasonable steps for the prevention and detection of fraud and

other irregularities.

The Trustees are responsible for the maintenance and

integrity of the charity and financial information included

on the charity’s website. Legislation in the United Kingdom

governing the preparation and dissemination of financial

statements may diVer from legislation in other jurisdictions.

The Trustees’ Report on pages 5 to 26 was approved by

the Board of Trustees on 13 July 2017 and signed on

their behalf.

Dominic Casserley

Chairman of Trustees

STATEMENT OF TRUSTEES’ RESPONSIBILITIES IN RESPECT OF THE TRUSTEES’ ANNUAL REPORT AND THE FINANCIAL STATEMENTS

27

Deloitte LLP

Statutory Auditor

London, UK

Date: 13 July 2017

Deloitte LLP is eligible to act as an auditor in terms of section

1212 of the Companies Act 2006 and consequently to act as the

auditor of a registered charity.

We have audited the financial statements of Charities

Aid Foundation for the year ended 30 April 2017 which

comprise the Consolidated and Charity Statement of

Financial Activities, the Consolidated and Charity Balance

Sheets, the Consolidated and Charity Cash Flow Statement

and the related notes 1 to 31. The financial reporting

framework that has been applied in their preparation is

applicable law and United Kingdom Accounting Standards

(United Kingdom Generally Accepted Accounting Practice),

including FRS 102 “The Financial Reporting Standard

applicable in the UK and Republic of Ireland”.

This report is made solely to the charity’s trustees, as a

body, in accordance with section 144 of the Charities Act

2011, regulations made under section 154 of that Act. Our

audit work has been undertaken so that we might state to

the charity’s trustees those matters we are required to state

to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the charity and

the charity’s trustees as a body, for our audit work, for this

report, or for the opinions we have formed.

Respective responsibilities of Trustees and auditor

As explained more fully in the Statement of Trustees’

Responsibilities, the trustees are responsible for the

preparation of the financial statements which give a true and

fair view.

We have been appointed as auditor under section 144 of the

Charities Act 2011 and report in accordance with regulations

made under that Act. Our responsibility is to audit and

express an opinion on the financial statements in accordance

with applicable law and International Standards on Auditing

(UK and Ireland). Those standards require us to comply with

the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts

and disclosures in the financial statements suQcient to give

reasonable assurance that the financial statements are free

from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting

policies are appropriate to the group’s and the parent

charity’s circumstances and have been consistently applied

and adequately disclosed; the reasonableness of significant

accounting estimates made by the trustees; and the overall

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEES OF CHARITIES AID FOUNDATION

presentation of the financial statements. In addition, we read

all the financial and non-financial information in the annual

report to identify material inconsistencies with the audited

financial statements and to identify any information that

is apparently materially incorrect based on, or materially

inconsistent with, the knowledge acquired by us in the

course of performing the audit. If we become aware of any

apparent material misstatements or inconsistencies we

consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the state of the group’s and

of the parent charity’s aVairs as at 30 April 2017 and

of the group’s incoming resources and application of

resources, for the year then ended;

have been properly prepared in accordance with United

Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the

requirements of the Charities Act 2011.

Matters on which we are required to report by exception

We have nothing to report in respect of the following

matters where the Charities Act 2011 requires us to report

to you if, in our opinion:

the information given in the Trustees’ Report is

inconsistent in any material respect with the financial

statements; or

proper accounting records have not been kept by the

parent charity; or

the parent charity financial statements are not in

agreement with the accounting records and returns; or

we have not received all the information and

explanations we require for our audit.

28

GROUP STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 30 APRIL 2017

Unrestricted Restricted and

endowment funds

Total

Notes

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Income

Donations 2,772 3,143 533,917 427,991 536,689 431,134

Legacies 4,758 568 19,117 34,895 23,875 35,463

7,530 3,711 553,034 462,886 560,564 466,597

Charitable activities:

Fee income 14,290 10,356 - 23 14,290 10,379

CAF Bank net interest income 10,756 9,673 - - 10,756 9,673

Investment income 4 6,334 6,083 12,803 10,595 19,137 16,678

Total income 5 38,910 29,823 565,837 473,504 604,747 503,327

Expenditure

Charitable activities:

Donations paid to charities 218 622 480,686 401,897 480,904 402,519

Other expenditure on charitable activities 35,363 29,086 - - 35,363 29,086

Total expenditure 5 35,581 29,708 480,686 401,897 516,267 431,605

Net income before group’s share of losses

in associate 3,329 115 85,151 71,607 88,480 71,722

Group’s share of losses in associate 14 (53) (520) (13) - (66) (520)

Net income/(expenditure) before net gains/

(losses) on investments 3,276 (405) 85,138 71,607 88,414 71,202

Net gains on debt securities 1,540 - - - 1,540 -

Net gains/(losses) on financial investments - - 74,559 (14,793) 74,559 (14,793)

Net gains on other investments 215 - 836 - 1,051 -

Net income/(expenditure) before

exceptional items5,031 (405) 160,533 56,814 165,564 56,409

Exceptional items

Multi-employer defined benefit pension plan:

Share of orphaned liabilites 28 - (2,000) - - - (2,000)

Costs of withdrawal from plan 28 - (327) - - - (327)

Net income/(expenditure) 5 5,031 (2,732) 160,533 56,814 165,564 54,082

Transfers between funds 23 141 4,717 (141) (4,717) - -

Net movement in funds before other

recognised gains/(losses)5,172 1,985 160,392 52,097 165,564 54,082

Other recognised gains/(losses)

Actuarial gains on defined benefit

pension plan28 431 163 - - 431 163

Asset limit remeasurement on defined

benefit pension plan28 (305) - - - (305) -

Net movement in funds 5,298 2,148 160,392 52,097 165,690 54,245

Reconciliation of funds

Total funds brought forward 54,910 52,762 1,064,408 1,012,311 1,119,318 1,065,073

Total funds carried forward 23 60,208 54,910 1,224,800 1,064,408 1,285,008 1,119,318

The notes on pages 34 to 73 form an integral part of these financial statements.

29

CHARITY STATEMENT OF FINANCIAL ACTIVITIESFOR THE YEAR ENDED 30 APRIL 2017

The notes on pages 34 to 73 form an integral part of these financial statements.

Unrestricted Restricted and

endowment funds

Total

Notes

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Income

Donations 6,121 5,739 431,858 356,597 437,979 362,336

Legacies 4,758 568 19,117 34,895 23,875 35,463

10,879 6,307 450,975 391,492 461,854 397,799

Charitable activities:

Fee income 10,068 9,325 - 23 10,068 9,348

Investment income 4 6,745 6,027 12,409 10,217 19,154 16,244

Total income 5 27,692 21,659 463,384 401,732 491,076 423,391

Expenditure

Charitable activities:

Donations paid to charities 242 622 392,164 351,756 392,406 352,378

Other expenditure on charitable activities 24,605 21,184 - - 24,605 21,184

Total expenditure 5 24,847 21,806 392,164 351,756 417,011 373,562

Net income/(expenditure) before net

gains/(losses) on investments2,845 (147) 71,220 49,976 74,065 49,829

Net gains on debt securities 1,540 - - - 1,540 -

Net gains/(losses) on financial investments - - 71,844 (14,315) 71,844 (14,315)

Net gains on other investments 215 - 836 - 1,051 -

Net losses on associate undertakings (53) (520) (13) - (66) (520)

Net income/(expenditure) before

exceptional items4,547 (667) 143,887 35,661 148,434 34,994

Exceptional items

Multi-employer defined benefit pension plan:

Share of orphaned liabilities 28 - (2,000) - - - (2,000)

Costs of withdrawal from plan 28 - (327) - - - (327)

Net income/(expenditure) 5 4,547 (2,994) 143,887 35,661 148,434 32,667

Transfers between funds 23 141 4,717 (141) (4,717) - -

Net movement in funds before other

recognised gains/(losses)4,688 1,723 143,746 30,944 148,434 32,667

Other recognised gains/(losses)

Actuarial gains on defined benefit

pension plan28 431 163 - - 431 163

Asset limit remeasurement on defined

benefit pension plan28 (305) - - - (305) -

Net movement in funds 4,814 1,886 143,746 30,944 148,560 32,830

Reconciliation of funds

Total funds brought forward 53,747 51,861 996,781 965,837 1,050,528 1,017,698

Total funds carried forward 23 58,561 53,747 1,140,527 996,781 1,199,088 1,050,528

30

GROUP BALANCE SHEETAS AT 30 APRIL 2017

The notes on pages 34 to 73 form an integral part of these financial statements.

Approved by the Trustees on 13 July 2017 and signed on their behalf by

Stuart Barnett FCA Mike Dixon FCA

Trustee Director of Finance and Operations

Unrestricted

funds

Restricted and

endowment

funds

Depositor and

donor client

balances Total

Notes

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Assets

Balances at Bank of England 33,744 26,192 1,571 3,541 167,965 130,964 203,280 160,697

Loans and advances to banks:

Repayable on demand 9 34,175 39,600 435,135 293,117 10,669 9,981 479,979 342,698

Other 9 - - 236,227 238,778 18,000 23,000 254,227 261,778

Loans and advances to

customers10 2,443 2,172 2,009 2,986 71,705 45,620 76,157 50,778

Debt securities 11 1,481 2,373 6,972 32,115 733,265 792,920 741,718 827,408

Financial investments 12 - - 566,301 507,203 - - 566,301 507,203

Other investments 13 657 273 3,440 650 - - 4,097 923

Associate undertaking 14 3,427 3,480 87 100 - - 3,514 3,580

Tangible fixed assets 15 5,151 5,040 - - - - 5,151 5,040

Other debtors 16 845 1,438 10,488 4,593 - - 11,333 6,031

Prepayments and

accrued income5,576 3,121 22,824 18,873 7,603 6,633 36,003 28,627

Total assets 87,499 83,689 1,285,054 1,101,956 1,009,207 1,009,118 2,381,760 2,194,763

Liabilities

CAF Bank depositors'

balances17 - - - - 1,002,063 1,000,088 1,002,063 1,000,088

Give As You Earn and

CAF Donate balances18 - - - - 6,266 6,836 6,266 6,836

Due to beneficiary

charities19 - - 58,232 36,222 - - 58,232 36,222

Other creditors 20 4,327 4,577 1,392 1,128 63 95 5,782 5,800

Accruals and deferred

income3,376 2,454 630 198 815 249 4,821 2,901

Provisions for

corporation tax 17 18 - - - - 17 18

Long-term loan 21 19,571 19,530 - - - - 19,571 19,530

Subordinated liabilities 22 - - - - - 350 - 350

Preference shares 22 - - - - - 1,500 - 1,500

Pension obligations 28 - 2,200 - - - - - 2,200

Total liabilities 27,291 28,779 60,254 37,548 1,009,207 1,009,118 1,096,752 1,075,445

Funds 23 60,208 54,910 1,224,800 1,064,408 - - 1,285,008 1,119,318

Total liabilities and

charitable funds87,499 83,689 1,285,054 1,101,956 1,009,207 1,009,118 2,381,760 2,194,763

31

CHARITY BALANCE SHEETAS AT 30 APRIL 2017

Registered charity

number 268369

Unrestricted

funds

Restricted and

endowment funds

Donor client

balances Total

Notes

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Assets

Loans and advances to banks:

Repayable on demand 9 31,512 37,939 385,301 248,644 6,329 6,985 423,142 293,568

Other 9 - - 229,898 227,073 - - 229,898 227,073

Loans and advances

to customers10 2,327 2,172 2,009 2,986 - - 4,336 5,158

Debt securities 11 - - - 32,115 - - - 32,115

Financial investments 12 - - 548,361 499,076 - - 548,361 499,076

Other investments 13 657 273 3,440 650 - - 4,097 923

Subsidiary undertakings 14 30,925 24,925 - 2,025 - - 30,925 26,950

Associate undertaking 14 3,427 3,480 87 100 - - 3,514 3,580

Tangible fixed assets 15 4,959 5,016 - - - - 4,959 5,016

Other debtors 16 4,421 4,175 8,878 2,905 - - 13,299 7,080

Prepayments and

accrued income5,453 3,035 22,633 18,515 - - 28,086 21,550

Total assets 83,681 81,015 1,200,607 1,034,089 6,329 6,985 1,290,617 1,122,089

Liabilities

Give As You Earn and

CAF Donate balances18 - - - - 6,266 6,836 6,266 6,836

Due to beneficiary charities 19 - - 58,058 35,982 - - 58,058 35,982

Other creditors 20 2,985 3,112 1,392 1,128 63 149 4,440 4,389

Accruals and deferred

income 2,564 2,426 630 198 - - 3,194 2,624

Long-term loan 21 19,571 19,530 - - - - 19,571 19,530

Pension obligations 28 - 2,200 - - - - - 2,200

Total liabilities 25,120 27,268 60,080 37,308 6,329 6,985 91,529 71,561

Funds 23 58,561 53,747 1,140,527 996,781 - - 1,199,088 1,050,528

Total liabilities and

charitable funds83,681 81,015 1,200,607 1,034,089 6,329 6,985 1,290,617 1,122,089

The notes on pages 34 to 73 form an integral part of these financial statements.

Approved by the Trustees on 13 July 2017 and signed on their behalf by

Stuart Barnett FCA Mike Dixon FCA

Trustee Director of Finance and Operations

32

GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 30 APRIL 2017

2017 2016

Notes £000 £000 £000 £000

Cash flows from operating activities:

Net cash provided by operating activities 24 1,992 29,982

Cash flows from investing activities

(Increase)/decrease in Cash Ratio Deposit with

Bank of England (34) 89

Net decrease in loans and advances to banks 7,551 38,577

Net decrease/(increase) in debt securities 82,600 (62,435)

Payments to acquire financial investments (112,180) (99,843)

Proceeds on disposal of financial investments 180,519 115,299

Payments to aquire other investments (170) -

Proceeds on disposal of other investments 6,736 312

Payments to acquire tangible fixed assets (420) (3)

(Increase)/decrease in investment portfolio cash and

settlements pending (4,605) 13,232

Receipts of Trust Funds investment income 12,702 12,213

Net cash provided by investing activities 172,699 17,441

Cash flows from financing activities

Proceeds on issue of long-term loan - 19,648

Payments of interest on long-term loan (1,020) -

Payments on redemption of subordinated liabilities (350) -

Payments on redemption of preference shares (1,500) -

Net cash (used in)/provided by financing activities (2,870) 19,648

Change in cash and cash equivalents in the year 171,821 67,071

Cash and cash equivalents as at 1 May 502,902 434,606

Change in cash and cash equivalents due to exchange

rate movements 8,009 1,225

Cash and cash equivalents as at 30 April 682,732 502,902

Represented by:

Balances at Bank of England repayable on demand 202,753 160,204

Loans and advances to banks repayable on demand 479,979 342,698

682,732 502,902

The notes on pages 34 to 73 form an integral part of these financial statements.

33

CHARITY CASH FLOW STATEMENT FOR THE YEAR ENDED 30 APRIL 2017

2017 2016

Notes £000 £000 £000 £000

Cash flows from operating activities:

Net cash provided by operating activities 24 14,589 11,130

Cash flows from investing activities

Net (increase)/decrease in loans and advances to banks (2,825) 14,320

Net decrease in debt securities 33,597 5,000

Payments to acquire financial investments (106,876) (98,378)

Proceeds on disposal of financial investments 177,393 115,297

Payments to acquire other investments (170) -

Proceeds on disposal of other investments 6,736 312

Payments to acquire subsidiary undertakings (6,000) (2,000)

Proceeds on disposal of subsidiary undertakings 2,025 -

Payments to acquire tangible fixed assets (225) -

(Increase)/decrease in investment portfolio cash and

settlements pending (4,369) 13,232

Receipts of Trust Funds investment income 12,308 11,835

Net cash provided by investing activities 111,594 59,618

Cash flows from financing activities

Net proceeds on issue of long-term loan - 19,648

Payments of interest on long-term loan (1,020) -

Net cash (used in)/provided by financing activities (1,020) 19,648

Change in cash and cash equivalents in the year 125,163 90,396

Cash and cash equivalents as at 1 May 293,568 201,878

Change in cash and cash equivalents due to exchange

rate movements 4,411 1,294

Cash and cash equivalents as at 30 April 423,142 293,568

The notes on pages 34 to 73 form an integral part of these financial statements.

34

1. Accounting policies The principal accounting policies and judgements used in

the preparation of the financial statements are:

1.1 Basis of preparation

These financial statements have been prepared in

accordance with UK Generally Accepted Accounting

Practice (UK GAAP), including FRS 102, the Financial

Reporting Standard applicable in the UK and Republic of

Ireland (‘FRS 102’) and the Statement of Recommended

Practice: Accounting and Reporting by Charities (‘Charity

SORP (FRS 102)’).

Monetary amounts in these financial statements are stated

in pounds sterling and are rounded to the nearest whole

£1,000, except where otherwise indicated.

1.2 Going concern

In order to assess the appropriateness of the going concern

assumption basis, the Trustees have considered the Group’s

financial position, reserves and forecasts for the foreseeable

future. They have considered the assumptions underlying

those forecasts and the impact of the potential risks

aVecting them.

After making due enquiries, the Trustees have a reasonable

expectation that the Group will be able to continue in

operation and meet its liabilities as they fall due for at least

twelve months from the date of signing this report. For this

reason, they continue to adopt the going concern basis in

preparing the accounts.

1.3 Funding accounting

The Group holds restricted, unrestricted and endowment funds.

Fund classification is an area of significant judgement and is

dealt with in Note 1.15 (a).

Unrestricted income funds comprise those funds which the

Trustees are free to use for any purpose in furtherance of the

charitable objects of the Group.

Restricted funds are funds that are to be used in accordance

with specific restrictions imposed by donors. Restricted funds

comprise donations to the Group which are held pending

instructions for investment or onward donation to charitable

organisations.

Two permanent endowments representing donations to

support the Group’s operations in Russia are not material and

are reported in these financial statements along with

restricted funds.

Further details of each fund are disclosed in note 23.

1.4 Income recognition

Income is recognised once the Group has entitlement to

the income, it is probable that the income will be received

and the amount can be measured reliably.

a Donations and legacies

Donations received are recognised once the Group

has entitlement to the income, it is probable that the

income will be received and the amount of income

receivable can be measured reliably.

In the event that a donation or grant is subject to

conditions, the income is deferred and not recognised until

either those conditions are fully met, or the fulfilment of

those conditions is wholly within the control of the Group

and it is probable that those conditions will be fulfilled.

Legacy donations are recognised on a case-by-case basis

where there has been a grant of probate or notification

has been made by executors that a distribution will be

made. In the event that the gift is in the form of an asset

other than cash, or a financial asset traded on a recognised

stock exchange, recognition is subject to the value of the

gift being reliably measurable with a degree of reasonable

accuracy. Where legacies have been notified with an

estimated value but the criteria for income recognition

have not been met, then the legacies are treated as

contingent assets and disclosed if material (see note 27).

Donations processed by the Group acting in an agency

role are recognised in the balance sheet. Such donations

consist of amounts in respect of CAF Give As You Earn

and CAF Donate services.

b Fee income

Income in respect of grant administration services provided

to grant-makers, which forms part of wider arrangements

including the receipt and onward payment of funds to

beneficiary charities, is recognised upon delivery of the

administration services. Recognition of this income is

dependent upon being able to measure reliably: the stage

of completion, the costs incurred in delivering the service

and the costs to complete the requirements of the service.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

35

1. Accounting policies (continued) Loan arrangement fees are recognised using the eVective

interest method over the term of the loan. Non-utilisation

fees on undrawn loans are recognised as income in the

period they are earned.

c Investment income

Interest receivable on financial assets is recognised

using the eVective interest method. Dividends are

recognised once the dividend has been declared and

notification has been received of the value of the

dividend due. Where investments are managed by

external investment managers, this is normally upon

notification by the investment manager of the

dividend income.

1.5 Expenditure recognition

Expenditure is recognised as soon as there is a legal or

constructive obligation to make a payment to a third party,

it is probable that settlement will be required and the

amount of the obligation can be measured reliably.

Donations paid to charities principally represent donations by

donor clients and are charged to the Statement of Financial

Activities (SOFA) when both the Group and beneficiary

charities are notified in the normal course of business of an

unconditional obligation to transfer funds. Amounts to be

paid at a future date are included in creditors.

Grants payable are payments where the beneficiary charity

has been formally notified in writing of the award. This

notification gives the recipient a reasonable expectation

that they will receive the one-year or multi-year grant. In

the case of an unconditional grant oVer this is accrued

once the recipient has been notified of the grant award.

Grant awards that are subject to the recipient fulfilling

performance conditions are accrued when any remaining

unfulfilled conditions attaching to that grant are outside of

the control of the Group.

The provision for a multi-year grant is recognised at its present

value where settlement is due over more than one year from

the date of the award, there are no unfulfilled performance

conditions under the control of the Group that would permit

the Group to avoid making the future payment(s), settlement

is probable and the eVect of discounting is material. The

discount rate used is the average rate of investment yield in

the year in which the grant award is made.

1.6 Allocation of support cost

All expenses including support costs and governance costs

are allocated or apportioned to the applicable expenditure

headings. Where support costs cannot be directly attributed

to one or more categories, they are apportioned on the

basis of staV headcount. No support costs are allocated to

restricted funds.

Governance costs comprise all costs involving the public

accountability of the charity and its compliance with

regulation and good practice.

Irrecoverable VAT is charged as a cost.

1.7 Operating leases

Operating lease rentals are charged to the SOFA on a

straight line basis over the term of the lease.

1.8 Pension costs

Details of the Group’s pension arrangements are set

out in note 28. The following policies are applied to the

recognition and measurement of costs and liabilities in

respect of the pension plans.

Defined contribution pension plans

Pension contributions payable for the year in respect of defined

contribution pension plans are recognised as an expense and

as a liability, after deducting any amounts already paid.

Defined benefit pension plan

In April 2016 CAF completed the set up of a new

CAF-specific defined benefit pension plan (Charities Aid

Foundation Pension Scheme), which is closed to both

new members and benefit accrual, and committed to the

withdrawal from a multi-employer defined benefit pension

plan, which has been closed to new members since July

2012. The eVective date of transfer of CAF’s share of the

assets and liabilities of the multi-employer plan to the

Charities Aid Foundation Pension Scheme was 30 April

2016. In accordance with the requirements of FRS 102, if

CAF’s obligations under the plan exceed the value of the

plan’s assets, CAF recognises a ‘net defined benefit liability’.

The ‘net defined benefit liability’ is measured in accordance

with the requirements of FRS 102 and is determined by an

independent actuary. The net change in the defined benefit

liability during the period is recognised in the SOFA.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

36

1. Accounting policies (continued)1.9 Foreign currency

Transactions in foreign currencies are translated to Sterling

at the exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign

currencies at the balance sheet date are retranslated to

Sterling at the exchange rate ruling at that date.

The results of overseas operations are translated at the

average annual rate of exchange and their balance sheets at

the rates ruling at the balance sheet date.

Exchange diVerences arising, including those on the

translation of opening net assets of overseas subsidiary

undertakings, are taken to the SOFA.

1.10 Taxation

Current tax, including UK corporation tax, is provided at

amounts expected to be paid (or recovered) using the tax

rates and laws that have been enacted or substantively

enacted by the balance sheet date.

1.11 Tangible fixed assets

Tangible fixed assets, other than long-leasehold property,

are stated at cost less accumulated depreciation and

accumulated impairment losses.

Long-leasehold property is stated at fair value less any

subsequent accumulated depreciation and impairment

losses. Gains and losses on revaluation are recognised in the

SOFA and accumulated in the revaluation reserve.

Where parts of an item of tangible fixed assets have

diVerent useful lives, they are accounted for as separate

items of tangible fixed assets.

Group entities assess at each reporting date whether

tangible fixed assets are impaired.

Depreciation is charged to the SOFA on a straight-line basis

over the estimated useful lives of each part of an item of

tangible fixed assets. Leased assets are depreciated over

the shorter of the lease term and their useful lives. The

estimated useful lives are as follows:

Long-leasehold property

Long-leasehold and other

leasehold improvements

Furniture and fittings

Computer equipment

50 years

Shorter of the remaining

term of the lease or the

useful economic life of the

improvements

1 to 4 years

1 to 3 years

Depreciation methods, useful lives and residual values are

reviewed if there is an indication of a significant change

in the pattern by which the Group expects to consume an

asset’s future economic benefits.

1.12 Basic financial instruments

Investments

Investments may be held for two broad investment objectives:

to generate income to support the Group’s charitable

activities – ‘Wholesale treasury assets’ which include

CAF Bank’s investments, or

to achieve capital appreciation and to generate income

for CAF, CAF America Donor Advised Funds and CADF

Charitable Trusts – ‘Financial investments’.

Wholesale treasury assets

Debt securities are recognised initially at transaction price

less attributable transaction costs. Subsequent to initial

recognition they are measured at amortised cost using the

eVective interest method, less any impairment losses.

Financial investments

Pools of investments are held for CAF Charitable Trusts,

CAF America Donor Advised Funds and CAF American

Donor Fund Trusts (collectively ‘ Trust funds’) to achieve an

investment return to fund future charitable donations. The

value of the investments determines the funds available for

donation at any point in time.

Basic financial instruments held as ‘Financial investments’ are,

therefore, measured initially at fair value, which is normally

the transaction price. Transaction costs are expensed in the

SOFA (where material) if the investments are subsequently

measured at fair value through profit or loss. Subsequent to

initial recognition all types of investments, including debt

securities, that can be measured reliably are measured at

fair value with changes recognised in the SOFA. Where the

fair value of such investments cannot be reliably measured

because, for example they are not publicly traded, the

investments are measured at cost less impairment.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

37

1. Accounting policies (continued)Other investments

Investments in equity instruments, such as ordinary and

preference shares, are measured initially at fair value,

which is normally the transaction price. Transaction costs

are excluded (where material) if the investments are

subsequently measured at fair value through profit or loss.

Subsequent to initial recognition investments that can be

measured reliably are measured at fair value with changes

recognised in the SOFA.

Investments in subsidiaries

Investments in subsidiaries which consist of ordinary share

capital, preference share capital and Additional Tier 1 (AT1)

securities are carried at cost less impairment.

Investment in associate

An associate is an entity in which the Group has significant

influence, but not control, over the operating and financial

policies of the entity. Significant influence is presumed to

exist when the investors holds between 20% and 50% of the

equity voting rights.

The Group’s share of the profits less losses of associates is

included in the Group SOFA and its interest in their net assets

is recorded on the balance sheet using the equity method.

In the parent financial statements, investments in

associates are carried at cost less impairment.

Investments in subsidiaries held for subsequent resale

Interests held as part of an investment portfolio are

deemed to be held with a view to subsequent resale.

These interests are not consolidated but are included

in the accounts of the investing entity at fair value with

movements in the fair value recognised through the SOFA.

Loans and advances to banks

Loans and advances to banks comprise the Group’s cleared

and uncleared balances held at clearing banks and deposits

with an original maturity of five years or less. These are

shown at the lower of cost or estimated realisable value.

Where a pool of ‘Financial investments’ is managed on

a discretionary basis by an investment manager and the

portfolio includes cash and cash deposits, those balances

are included with the investment balance to reflect that the

funds do not form part of normal day-to-day operational

cash flows and balances.

CAF Bank depositors’ balances

CAF Bank depositors’ balances represent the value of

deposits by account holders and are recorded as liabilities.

Debtors and creditors

Debtors are recognised at the settlement amount due

after any discount oVered. Prepayments are valued at the

amount prepaid.

Creditors are recognised where there is a present obligation

resulting from a past event that will probably result in a

transfer of funds to a third party and the amount due to

settle the obligation can be measured or estimated reliably.

Creditors are normally recognised at their settlement

amount after allowing for any discounts due.

Interest-bearing loans receivable and payable

Interest-bearing loans are recognised initially at the present

value of future payments discounted at a market rate of

interest. Subsequent to initial recognition, interest-bearing

loans are stated at amortised cost using the eVective

interest method, less any impairment losses.

Concessionary loans receivable and payable

Concessionary loans may be receivable from other

charities as a result of lending activity undertaken by CAF

Venturesome and loans advanced by CAF Charitable Trusts.

Such loans are advanced at concessionary (non-market) rates

of interest, which may include interest-free loans. These are

initially recognised at the amount advanced to the borrower

and are subsequently measured at the amount advanced

less amounts received less any impairment.

Concessionary loans may be payable in respect of

funds advanced to support lending undertaken by CAF

Venturesome. Such loans are advanced at concessionary

(non-market) rates and are usually interest-free loans.

These are initially recognised at the amount advanced by

the lender and are subsequently measured at the amount

advanced less any amounts repaid to the lender.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

38

1. Accounting policies (continued)1.13 Other financial instruments - financial instruments

not considered to be ‘Basic financial instruments’

Other financial instruments not meeting the definition

of ‘Basic financial instruments’ are recognised initially

at fair value. Subsequent measurement is at fair value

with changes recognised in the SOFA, except for equity

instruments which are not publicly traded and whose value

cannot otherwise be measured reliably, which are measured

at cost less impairment.

Derivative financial instruments are not held by the Group,

except where a pool of ‘Financial investments’ is managed

on a discretionary basis by an investment manager and

derivative financial instruments (such as forward currency

exchange contracts) may be used to mitigate risk.

1.14 Impairment of assets

Financial assets (including trade and other debtors)

Financial assets including loans are assessed at each

reporting date to determine whether there is objective

evidence of impairment. Objective evidence can include

default or delinquency by a borrower, restructuring of a

loan or advance on terms the Group would otherwise not

consider, indications that a borrower or issuer may become

insolvent, or a reduction in marketability of security.

The Group considers evidence for impairment for loans

and advances (including on-demand commitments) at

both specific and collective level. If there is evidence of

impairment leading to an impairment loss for an individual

counterparty relationship, then the amount of the loss is

determined as the diVerence between the carrying amount

of the loan, including accrued interest, and the estimated

recoverable amount. The estimated recoverable amount

is measured as the present value of expected future cash

flows discounted at the loan’s original eVective interest

rate, including cash flows that may result from foreclosure

less costs for obtaining and selling collateral. The carrying

amount of the loan is reduced by the use of an allowance

account and the amount of the loss is recognised in

the SOFA.

Future cash flows in a group of financial assets that are

collectively evaluated for impairment are estimated on

the basis of the contractual cash flows of the assets in

the Group and loss experience for assets with credit risk

characteristics similar to those in the Group. In addition,

the Group uses its judgement to estimate the amount of

an impairment loss, supported by historical loss experience

data for similar assets. The use of such judgements and

reasonable estimates is considered by management to be

an essential part of the process.

Non-financial assets

The carrying amounts of the Group’s non-financial assets are

reviewed at each reporting date to determine whether there is

any indication of impairment. If any such indication exists, then

the asset’s recoverable amount is estimated. The recoverable

amount of an asset is the greater of its value in use and its fair

value less costs to sell. In assessing value in use, the estimated

future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount

of an asset exceeds its estimated recoverable amount.

Impairment losses are recognised in the SOFA.

An impairment loss is reversed if and only if the reasons for

the impairment have ceased to apply.

Impairment losses recognised in prior periods are assessed

at each reporting date for any indications that the loss

has decreased or no longer exists. An impairment loss is

reversed only to the extent that the asset’s carrying amount

does not exceed the carrying amount that would have

been determined, net of depreciation or amortisation, if no

impairment loss had been recognised.

Investment properties

Investment properties which are only acquired upon

donation, usually by legacies, to the Group are measured

initially at probate valuation. Subsequent to initial

recognition, investment properties are held at open

market value.

1.15 Significant estimates and judgements

a Judgements

Classification of funds

Judgement has been applied in whether certain funds held

in accordance with CAF’s standard terms and conditions

should be classified as restricted funds or designated funds

under the SORP. These funds, which amount to £995.6m

(2016: £855.3m), are held by CAF pending instruction for

onward distribution to third party charities.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

39

1. Accounting policies (continued) The Trustees consider that the following factors indicate

that these funds held in CAF Charity Accounts, CAF

Company Accounts and CAF Charitable Trusts are more

appropriately classified as restricted funds:

The SORP states that a restriction may result from a

decision by the donor to support a specific purpose

of the charity. So, although the standard terms

and conditions of CAF do not themselves restrict

the funds, the view of the Trustees is that the donor

decision results in a restriction in substance.

There is an expectation from the donor and users of

the accounts that these funds will be used in line with

the wishes of the donor.

In the ordinary course of business, there is no

expectation that these funds will be used for any

purposes other than onward distribution. This is

supported by long term business practice and the fact

that use of these funds for CAF’s own needs would

likely be damaging to the business model and would

only ever be contemplated in an extreme event.

Legacies

Judgement has been applied in recognising income

from legacies gifted to CAF. Legacies are recognised as

income where receipt is probable, which is determined

from a review of a number of criteria including grant of

probate, suQciency of assets and the existence of any

conditions to be met.

b Estimates

With respect to the next reporting period, 2017/18,

the most significant areas of uncertainty that aVect

the carrying value of assets held by the Group are the

level of investment return and the performance of

investment markets.

Pensions

An estimate has been made of a net defined benefit

liability from a former defined benefit pension

arrangement (the Charities Aid Foundation Pension

Scheme) which is no longer available to staV (see note

28 for more information).

Fair value – estimations and assumptions in valuation

models used

Where no market value is available for an investment

or no recent transactions of an identical asset are

available, an estimate is made of fair value using

other valuation models. Such models include those

in accordance with International Private Equity and

Venture Capital Valuation Guidelines.

The Group carries its investment property at fair value,

with changes in fair value being recognised in the

SOFA. The Group engaged independent valuation

specialists to determine fair value at 30 April 2017.

The valuations were undertaken in accordance with

the Royal Institution of Chartered Surveyors Valuation

– Professional Standards 2015 and in accordance with

United Kingdom Guidance Note 7 – Valuations for

Charities.

1.16 Entity status

CAF meets the definition of a Public Benefit Entity under

FRS102.

2. Consolidation The Group financial statements include the accounts of CAF

(the charity) and its subsidiary undertakings for the year. The

income and donations received and net movement in funds

for CAF are disclosed in note 23.

Consolidated entities

The following entities are controlled by CAF and are

consolidated in the Group financial statements:

Trading subsidiaries

CAF owns 100% of the equity share capital of the following:

CAF Bank Limited, a bank for charities authorised by

the Prudential Regulation Authority and regulated by

the Financial Conduct Authority and the Prudential

Regulation Authority

CAF Financial Solutions Limited, a company authorised

and regulated by the Financial Conduct Authority,

responsible for the marketing and promotion of

regulated savings and investment products to customers

of CAF and its subsidiaries

CAF Investments Limited, the sponsor of an Open

Ended Investment Company (OEIC), namely, FP CAF

Investment Fund

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

40

2. Consolidation (continued)UK registered charities

Southampton Row Trust Limited, which operates as

CAF American Donor Fund, is a UK charitable company

registered with the Charity Commission (number 1079020)

and is wholly-owned by CAF America (see below). CAF

American Donor Fund supports cross-border tax-eQcient

giving by enabling individuals liable for tax in both the UK

and USA to obtain tax relief on charitable gifts in

each country.

Overseas charitable entities

CAF controls the following overseas charitable entities:

CAF America, a US public charity recognised by the US

Internal Revenue Service. CAF America provides US citizens

with the opportunity to make tax-eVective gifts for the

support of overseas charities. CAF has the power to appoint

and remove the members of CAF America at any time

CAF Canada, a Canadian charity registered with the

Canadian Revenue Agency of which CAF and CAF America

are the only members

CAF Philanthropy Services LLC and the CAF Foundation

for Philanthropy Support and Development, which were

founded in Russia by CAF and operate alongside our

branch in Moscow. Together they work to raise awareness

of NGO’s and to advance giving and philanthropy in Russia

CAF Global Trustees (CAF GT)

CAF GT is a UK charitable company registered with the

Charity Commission (registered number 1111039). It

acts as the corporate trustee of independent foundations,

enabling donors to register their own charitable foundation

in the UK even if they are not a UK citizen. CAF controls

CAF GT and its results and net assets are included in

the accounts of the CAF Group, but the independent

foundations are not consolidated.

Entities not consolidated

Good2Give (Australia), BCause (Bulgaria), CAF India and

CAF Southern Africa are independent members of the CAF

international network. CAF has a minority representation

on their boards and consequently their results are not

consolidated in the Group financial statements. IDIS Brazil is

a strategic partner within the CAF International network.

Other than through investment as an account holder or unit

holder, and fees earned for administration and marketing,

the CAF Group entities have no beneficial interest in the net

assets of the following:

CAF UK Equitrack Fund

CAF Socially Responsible Portfolio

FP CAF Investment Fund and its sub-funds

CAF Managed Portfolio Service

CAF 60 Day Notice Account

CAF 90 Day Notice Account

CAF One Year Fixed Term Deposit Account

CAF 12 Month Bond

Associate undertaking

Charity Bank

CAF’s intention is to be a long-term passive investor in

Charity Bank, but does not intend to be a source of further

capital as Charity Bank’s needs grow.

As a result of third party investments in Charity Bank, CAF’s

interest in Charity Bank reduced from 31.8% to 22.4% with

CAF’s voting rights reducing from 31.8% to 24.5%. At the

date of this report, CAF’s interest had reduced further to

19.3% with its voting rights remaining at 24.5%.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

41

Unrestricted Restricted Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000Group

Interest on fixed interest securities and

cash deposits 6,055 5,845 1,244 1,655 7,299 7,500

Dividends 34 35 11,559 8,940 11,593 8,975

Interest on concessionary loans to charities 245 203 - - 245 203

6,334 6,083 12,803 10,595 19,137 16,678

Charity

Interest on fixed interest securities and cash

deposits 5,978 5,606 1,140 1,277 7,118 6,883

Dividends 522 218 11,269 8,940 11,791 9,158

Interest on concessionary loans to charities 245 203 - - 245 203

6,745 6,027 12,409 10,217 19,154 16,244

4. Investment income

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 20173. Results and net assets of subsidiaries Due to the number of subsidiary undertakings, the disclosure required by the Charities SORP would result in information of

excessive length being given. As a result, detailed information is only given for CAF Bank, whose results significantly aVect the

Group accounts. The movement of donor funds within CAF’s principal subsidiaries, other than CAF Bank, are set out in note 23.2.

2017 2016

CAF Bank Limited £000 £000

Profit and loss account

Interest receivable 11,748 11,646

Interest payable (992) (1,790)

Net interest income 10,756 9,856

Other operating income/(expenditure) 775 159

Administrative expenses (6,944) (5,921)

Loan loss provision (258) (267)

FSCS levy 30 (90)

Profit on ordinary activities before

taxation4,359 3,737

Tax on profit on ordinary activities (800) (698)

Profit on ordinary activities after

taxation 3,559 3,039

Profit and loss account balance

brought forward - (222)

Charitable donation to CAF (3,839) (3,292)

Current tax credit thereon 768 658

Dividends payable to AT1

shareholders (488) (183)

Profit and loss account balance

carried forward- -

2017 2016

£000 £000

Balance Sheet

Total assets 1,039,785 1,034,753

Total liabilities

Depositors' balances 1,003,633 1,001,604

Other liabilities 5,802 8,799

1,009,435 1,010,403

Shareholders’ funds 30,350 24,350

1,039,785 1,034,753

42

5. Income and donations received and charitable activities expenditure

5.1 Group unrestricted

funds Major

donors

Regular

givers

Companies Charities Inter-

national

Sector

support

Other

funds

Total

2017

Total

2016

£000 £000 £000 £000 £000 £000 £000 £000 £000

Income

Donations 11 1,322 435 11 481 510 2 2,772 3,143

Legacies - - - - - - 4,758 4,758 568

11 1,322 435 11 481 510 4,760 7,530 3,711

Charitable activities:

Fee income 2,684 403 2,510 3,537 5,116 40 - 14,290 10,356

CAF Bank net interest

income - - - 10,756 - - - 10,756 9,673

Investment income 2,789 1,255 1,297 397 133 95 368 6,334 6,083

Total income 5,484 2,980 4,242 14,701 5,730 645 5,128 38,910 29,823

Expenditure on charitable activities

Donations paid to charities - - - 21 197 - - 218 622

Direct costs 2,183 1,618 3,350 10,099 5,737 2,347 1,026 26,360 20,662

Support costs:

Human resources 107 88 198 384 17 71 - 865 893

Property 198 164 366 713 31 131 - 1,603 1,650

Finance 215 178 399 775 34 143 - 1,744 1,634

Information systems 678 606 956 1,120 78 177 - 3,615 3,300

Governance costs 125 103 231 559 75 83 - 1,176 947

Total support costs 1,323 1,139 2,150 3,551 235 605 - 9,003 8,424

Total expenditure 3,506 2,757 5,500 13,671 6,169 2,952 1,026 35,581 29,708

Net income/(expenditure)

before net gains/(losses)

on investments

1,978 223 (1,258) 1,030 (439) (2,307) 4,102 3,329 115

Net gains on debt securities - - - - - - 1,540 1,540 -

Net gains on other

investments - - - - - - 215 215 -

Group’s share of losses in

associate - - - - - - (53) (53) (520)

Net income/(expenditure)

before exceptional items1,978 223 (1,258) 1,030 (439) (2,307) 5,804 5,031 (405)

Exceptional items

Multi-employer defined

benefit pension plan:

Share of orphaned

liabilities - - - - - - - - (2,000)

Costs of withdrawal from

multi-employer plan - - - - - - - - (327)

Net income/(expenditure) 1,978 223 (1,258) 1,030 (439) (2,307) 5,804 5,031 (2,732)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

43

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Major

donors

Regular

givers

Companies Charities Inter-

national

Sector

support

Other

funds

Total

2017

Total

2016

£000 £000 £000 £000 £000 £000 £000 £000 £000

Income

Donations* 11 1,322 435 3,841 - 510 2 6,121 5,739

Legacies - - - - - - 4,758 4,758 568

11 1,322 435 3,841 - 510 4,760 10,879 6,307

Charitable activities:

Fee income 2,683 402 2,509 3,163 1,271 40 - 10,068 9,325

Investment income 2,789 1,255 1,297 397 56 95 856 6,745 6,027

Total income 5,483 2,979 4,241 7,401 1,327 645 5,616 27,692 21,659

Expenditure on charitable activities

Donations paid to charities - - - 21 221 - - 242 622

Direct costs 2,183 1,618 3,350 3,392 1,851 2,347 1,026 15,767 12,905

Support costs:

Human resources 107 88 198 384 17 71 - 865 893

Property 198 164 366 713 31 131 - 1,603 1,650

Finance 215 178 399 775 34 143 - 1,744 1,634

Information systems 678 606 956 1,120 78 177 - 3,615 3,300

Governance costs 125 103 231 449 20 83 - 1,011 802

Total support costs 1,323 1,139 2,150 3,441 180 605 - 8,838 8,279

Total expenditure 3,506 2,757 5,500 6,854 2,252 2,952 1,026 24,847 21,806

Net income/(expenditure)

before net gains/(losses)

on investments

1,977 222 (1,259) 547 (925) (2,307) 4,590 2,845 (147)

Net gains on debt securities - - - - - - 1,540 1,540 -

Net gains on other

investments - - - - - - 215 215 -

Net losses on associate

undertakings - - - - - - (53) (53) (520)

Net income/(expenditure)

before exceptional items1,977 222 (1,259) 547 (925) (2,307) 6,292 4,547 (667)

Exceptional items

Multi-employer defined

benefit pension plan:

Share of orphaned

liabilities - - - - - - - - (2,000)

Costs of withdrawal from

multi-employer plan - - - - - - - - (327)

Net income/(expenditure) 1,977 222 (1,259) 547 (925) (2,307) 6,292 4,547 (2,994)

* Donation income, in respect for services for charities (‘Charities’), includes £3.84m (2016: £3.29m) from CAF Bank

(see note 3).

5.2 Charity unrestricted

funds

44

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

The net movement in funds includes foreign currency gains of £11.57m (2016: £4.65m).

Major

donors

Regular

givers

Companies Charities Inter-

national

Sector

support

Total

2017

Total

2016

£000 £000 £000 £000 £000 £000 £000 £000

Income

Donations 252,310 71,991 101,103 2 108,037 474 533,917 427,991

Legacies 19,117 - - - - - 19,117 34,895

271,427 71,991 101,103 2 108,037 474 553,034 462,886

Fee income - - - - - - - 23

Investment income 12,409 - - - 394 - 12,803 10,595

Total income 283,836 71,991 101,103 2 108,431 474 565,837 473,504

Expenditure on charitable activities

Donations paid to charities 176,547 80,643 129,122 322 90,403 3,649 480,686 401,897

Total expenditure 176,547 80,643 129,122 322 90,403 3,649 480,686 401,897

Net income/(expenditure)

before net gains/(losses)

on investments

107,289 (8,652) (28,019) (320) 18,028 (3,175) 85,151 71,607

Net gains/(losses) on

financial investments 71,644 - - - 2,915 - 74,559 (14,793)

Net gains on

other investments 836 - - - - - 836 -

Group’s share of losses

in associate (13) - - - - - (13) -

Net income/(expenditure) 179,756 (8,652) (28,019) (320) 20,943 (3,175) 160,533 56,814

5.4 Group restricted funds

5.3 Unrestricted funds - Allocation of support costs

Support costs of charitable activities comprise costs of certain central functions, which underpin the delivery of our services

to support donors, charities and the sector and are shared across more than one of our activities. These shared functions

provide support in areas such as information systems, premises, human resources, finance, executive management and

governance. Where the costs of these shared functions cannot be attributed directly to an area of our activities, they are

allocated on the basis of staV headcount.

No support costs are allocated to restricted funds.

45

The net movement in funds includes foreign currency gains of £6.41m (2016: £2.41m).

Major

donors

Regular

givers

Companies Charities Inter-

national

Sector

support

Total

2017

Total

2016

£000 £000 £000 £000 £000 £000 £000 £000

Income

Donations 252,310 71,991 105,404 2 1,677 474 431,858 356,597

Legacies 19,117 - - - - - 19,117 34,895

271,427 71,991 105,404 2 1,677 474 450,975 391,492

Fee income - - - - - - - 23

Investment income 12,409 - - - - - 12,409 10,217

Total income 283,836 71,991 105,404 2 1,677 474 463,384 401,732

Expenditure on charitable activities

Donations paid to charities 176,547 80,643 129,177 322 1,826 3,649 392,164 351,756

Total expenditure 176,547 80,643 129,177 322 1,826 3,649 392,164 351,756

Net income/(expenditure)

before net gains/(losses)

on investments

107,289 (8,652) (23,773) (320) (149) (3,175) 71,220 49,976

Net gains/(losses) on

financial investments 71,644 - - - 200 - 71,844 (14,315)

Net gains on

other investments 836 - - - - - 836 -

Net losses on

associate undertakings (13) - - - - - (13) -

Net income/(expenditure) 179,756 (8,652) (23,773) (320) 51 (3,175) 143,887 35,661

5.5 Charity restricted funds

Group Charity

Governance costs include the

following amounts:

2017

£000

2016

£000

2017

£000

2016

£000

Internal audit 284 142 225 142

Fees payable to the external auditor,

net of VAT:

Audit of financial statements 300 286 160 144

Other services* 101 24 30 -

Trustees' indemnity insurance 26 22 26 22

6. Governance costs

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

* In 2016, in addition to the fees paid to the former

external auditor (KPMG), an amount of £99k was

also incurred in respect of bond issue costs which

were included as capitalised costs, (see note 21).

5.6 Restricted funds - Payments to NCVO

CAF was founded by NCVO to whom it has an ongoing annual obligation to pay a levycollect charitable contributions on its

behalf. Donations paid to charities include £2.07m (2016: £1.98m) paid to NCVO in respect of this obligation.

46

Pension contributions and pension allowances were paid in respect of the employees

included in the preceding table as follows:

Group Charity

2017

Number

2016

Number

2017

Number

2016

Number

Number of employees 32 31 28 29

£000 £000 £000 £000

The aggregate value of

those contributions258 287 222 232

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Employee emoluments

The number of staV whose total emoluments (salary plus taxable benefits excluding pension contributions, and pension

allowances, inclusive of those made through salary sacrifice) exceeded £60,000 during the year is as follows:

Group Charity

2017

Number

2016

Number

2017

Number

2016

Number

£60,001 - £70,000 16 14 14 13

£70,001 - £80,000 2 3 2 3

£80,001 - £90,000 3 4 3 4

£90,001 - £100,000 3 2 3 2

£100,001 - £110,000 2 3 1 3

£110,001 - £120,000 1 - 1 -

£120,001 - £130,000 - 1 - 1

£130,001 - £140,000 1 - 1 -

£140,001 - £150,000 - 1 - -

£150,001 - £160,000 1 2 1 2

£160,001 - £170,000 3 - 2 -

£170,001 - £180,000 - 1 - 1

32 31 28 29

Group Charity

2017

£000

2016

£000

2017

£000

2016

£000

Salaries and wages 16,752 15,467 12,627 11,667

Social security costs 1,700 1,634 1,361 1,251

Defined contribution scheme pension costs 1,408 984 1,183 768

Training and welfare 332 394 332 353

20,192 18,479 15,503 14,039

Other pension costs (see note 28) 196 10 196 10

20,388 18,489 15,699 14,049

7. Stai costs

Included within salaries and wages are redundancy and termination costs totalling £70k (2016: £45k).

47

Group Charity

Average number of employees during the year was:2017

Number

2016

Number

2017

Number

2016

Number

Full-time and part-time employees 532 510 440 427

Full-time equivalent 487 460 417 395

Average number of full time equivalent

employees analysed by function: Number Number Number Number

Major donors 51 49 51 49

Regular givers 43 44 43 44

Companies 95 94 95 94

Charities 185 166 185 166

International 78 74 8 9

Sector support 34 31 34 31

Governance 1 2 1 2

487 460 417 395

The key management personnel of the Group are the Executive Committee of CAF. Total salary and

employee benefits received by key management personnel during the year amounted to £958,486

(2016: £993,127) plus pension contributions and pension allowances of £89,208 (2016: £99,849).

The Trustees receive no remuneration for their services, but are reimbursed for out-of-pocket expenses

in respect of attending meetings and carrying out duties on behalf of CAF. The aggregate value

reimbursed for the year was £243 (2016: £290) paid to two Trustees.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Employee numbers

7. Stai costs (continued)

48

9. Loans and advances to banks

Group

Unrestricted funds Restricted and

endowment funds

Depositor and donor

client balances

Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Repayable on demand 34,175 39,600 435,135 293,117 10,669 9,981 479,979 342,698

Remaining maturity of

other loans and advances:

Less than 6 months - - 35,814 90,823 10,000 - 45,814 90,823

Over 6 months to 1 year - - 57,413 20,955 8,000 15,000 65,413 35,955

Over 1 year to 5 years - - 143,000 127,000 - 8,000 143,000 135,000

34,175 39,600 671,362 531,895 28,669 32,981 734,206 604,476

Charity

Unrestricted funds Restricted and

endowment funds

Donor client

balances

Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Repayable on demand 31,512 37,939 385,301 248,644 6,329 6,985 423,142 293,568

Remaining maturity of

other loans and advances:

Less than 6 months - - 31,338 81,184 - - 31,338 81,184

Over 6 months to 1 year - - 55,560 18,889 - - 55,560 18,889

Over 1 year to 5 years - - 143,000 127,000 - - 143,000 127,000

31,512 37,939 615,199 475,717 6,329 6,985 653,040 520,641

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

8. Taxation

CAF is considered to pass the tests set out in Paragraph 1 Schedule 6 of the Finance Act 2010 and therefore

it meets the definition of a charitable trust for UK income tax purposes. Accordingly, the charity is exempt

from taxation in respect of income or capital gains received within categories covered by Part 10 of the

Income Tax Act 2007 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such

income or gains are applied exclusively to charitable purposes.

During the year, a corporation tax charge of £32,000 (2016: £40,000) arose for the Group which is

attributable to profits retained by CAF Bank for the payment of non-deductible coupons on

preference shares.

49

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

10. Loans and advances to customers

Unrestricted funds Restricted and

endowment funds

Depositor and donor

client balances

Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Concessionary loans:

CAF Venturesome

loans to charities 2,327 2,172 84 320 - - 2,411 2,492

CAF Charitable Trust

loans to charities- - 1,925 2,666 - - 1,925 2,666

Charity 2,327 2,172 2,009 2,986 - - 4,336 5,158

CAF Bank loans to charities - - - - 71,705 45,620 71,705 45,620

CADF loans to charities 116 - - - - - 116 -

Group 2,443 2,172 2,009 2,986 71,705 45,620 76,157 50,778

Group Charity

Maturity

2017

£000

2016

£000

2017

£000

2016

£000

Amounts receivable in less than one year

CAF Venturesome loans to charities 3,004 3,088 3,004 3,088

CAF Charitable Trust loans to charities 3,093 1,413 3,093 1,413

CAF Bank loans to charities 15,113 4,479 - -

21,210 8,980 6,097 4,501

Amounts receivable in one to five years

CAF Venturesome loans to charities 2,124 1,430 2,124 1,430

CAF Charitable Trust loans to charities 329 2,239 329 2,239

CAF Bank loans to charities 18,742 12,363 - -

CADF loans to charities 116 - - -

21,311 16,032 2,453 3,669

Amounts receivable in more than five years

CAF Venturesome loans to charities 208 308 208 308

CAF Charitable Trust loans to charities 21 323 21 323

CAF Bank loans to charities 39,061 29,487 - -

39,290 30,118 229 631

Less: Deferred income and provisions

CAF Venturesome loans to charities (2,925) (2,334) (2,925) (2,334)

CAF Charitable Trust loans to charities (1,518) (1,309) (1,518) (1,309)

CAF Bank loans to charities (1,211) (709) - -

(5,654) (4,352) (4,443) (3,643)

76,157 50,778 4,336 5,158

50

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Unrestricted funds

Group Charity

Book value Market value Book value Market value

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Listed:

UK government 1,481 2,373 - 2,343 - - - -

1,481 2,373 - 2,343 - - - -

Restricted and endowment funds

Listed:

UK government - 9,817 - 10,071 - 9,817 - 10,071

Multilateral financial institutions - 19,784 - 20,651 - 19,784 - 20,651

Fixed coupon corporate bonds - 2,514 - 2,687 - 2,514 - 2,687

- 32,115 - 33,409 - 32,115 - 33,409

Unlisted:

Certificates of deposit 6,972 - 6,972 - - - - -

6,972 - 6,972 - - - - -

6,972 32,115 6,972 33,409 - 32,115 - 33,409

Depositor and donor client balances

Listed:

UK government 24,883 87,655 26,799 88,352 - - - -

Multilateral financial institutions 368,604 309,297 370,396 310,154 - - - -

Fixed coupon corporate bonds 145,252 144,042 146,739 144,632 - - - -

Floating rate corporate bonds 174,526 202,025 175,355 201,964 - - - -

713,265 743,019 719,289 745,102 - - - -

Unlisted:

Certificates of deposit 20,000 40,000 20,225 40,326 - - - -

Commercial paper - 9,901 - 9,901 - - - -

20,000 49,901 20,225 50,227 - - - -

733,265 792,920 739,514 795,329 - - - -

Total debt securities 741,718 827,408 746,486 831,081 - 32,115 - 33,409

11. Debt securities

Book value

Group Charity

Maturity

2017

£000

2016

£000

2017

£000

2016

£000

1 day to 8 days 211 9,972 - -

Over 8 days to 3 months 1,537 85,345 - -

3 months to 6 months 156,841 81,859 - 5,519

6 months to 1 year 145,895 152,355 - -

304,484 329,531 - 5,519

1 year to 5 years 437,234 488,060 - 16,779

741,718 817,591 - 22,298

5 years and over - 9,817 - 9,817

Total debt securities 741,718 827,408 - 32,115

Unamortised premiums (1,522) (10,103) - (2,314)

In accordance with FRS102 debt securities are measured at amortised cost using the eVective interest method.

51

Cost Amortisation Book value

Group £000 £000 £000

Unrestricted funds

At 1 May 2016 2,522 (149) 2,373

Redemptions (946) 65 (881)

Amortisation - (11) (11)

At 30 April 2017 1,576 (95) 1,481

Restricted and endowment funds

At 1 May 2016 33,667 (1,552) 32,115

Acquisitions 12,959 (22) 12,937

Disposals (6,292) - (6,292)

Redemptions (33,667) 1,609 (32,058)

Amortisation - (81) (81)

Foreign exchange gains 351 - 351

At 30 April 2017 7,018 (46) 6,972

Depositor and donor client balances

At 1 May 2016 801,615 (8,695) 792,920

Acquisitions 284,641 (3,321) 281,320

Redemptions (342,508) 6,422 (336,086)

Amortisation - (4,889) (4,889)

At 30 April 2017 743,748 (10,483) 733,265

11. Debt securities (continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Cost Amortisation Book value

Charity £000 £000 £000

Restricted and endowment funds

At 1 May 2016 33,667 (1,552) 32,115

Acquisitions - - -

Redemptions (33,667) 1,609 (32,058)

Amortisation - (57) (57)

At 30 April 2017 - - -

52

Group Charity

Restricted and endowment funds2017

£000

2016

£000

2017

£000

2016

£000

At 1 May 2016 492,327 504,122 484,200 497,040

Additions 160,453 118,547 150,465 116,968

Disposal proceeds (180,519) (115,299) (177,393) (115,297)

Net investment gains/(losses) 74,559 (15,043) 71,844 (14,511)

546,820 492,327 529,116 484,200

Investment portfolio cash and

settlements pending 19,481 14,876 19,245 14,876

At 30 April 2017 566,301 507,203 548,361 499,076

Historical cost of investments 455,568 438,896 441,495 430,962

Represented by:

Listed securities:

UK Government fixed interest 6,776 16,625 6,776 16,625

Overseas Government fixed interest 19,437 9,335 19,437 9,335

Other fixed interest 30,399 7,604 30,399 7,604

UK equities 36,332 29,097 36,292 29,097

Overseas equities 21,886 10,100 21,886 10,100

CAF investment funds:

FP CAF UK Equity Fund 79,880 74,083 79,880 74,083

FP CAF Fixed Interest Fund 33,938 34,909 33,938 34,909

CAF UK Equitrack Fund 40,674 35,233 35,528 30,774

FP CAF International Equity 12,569 10,325 12,569 10,325

FP CAF Alternative Strategies 8,497 7,257 8,497 7,257

Unit trusts and other pooled investments 240,027 245,644 227,594 242,163

Investment trusts 10,968 7,824 10,883 7,699

Unlisted investments:

UK 1,490 473 1,490 411

Overseas 3,947 3,818 3,947 3,818

546,820 492,327 529,116 484,200

Investment portfolio cash and settlements pending 19,481 14,876 19,245 14,876

566,301 507,203 548,361 499,076

12. Financial investments

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Nature of Trust funds

Trust funds are held pending onward donation instructions from clients. Until such instructions are received there is no

constructive obligation or liability to pay a defined amount within a set time period. Donors typically hold a proportion

of their funds in cash in order to meet their short-term giving expectations and invest funds to meet their medium to

long-term philanthropic objectives. Donors plan donations by reference to the market values and liquidity profile of the

assets held for their trust fund.

The following tables show the carrying amounts of investments held by the Group at fair value and represent restricted funds

held for CAF Charitable Trusts, CAF America Donor Advised Funds and CAF American Donor Fund Trusts (collectively ‘Trust

funds’). It does not include fair value information for other financial assets and liabilities held by the Group which are not

measured at fair value.

53

12. Financial investments (continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Financial investments measured

at fair value

Level 1 Level 2 Level 3 Total

2017

£000

2017

£000

2017

£000

2017

£000

Sovereign debt securities 26,258 - - 26,258

Corporate debt securities 12,389 - - 12,389

Pooled funds - fixed interest 46,127 - - 46,127

84,774 - - 84,774

Equity securities 64,664 - 4,437 69,101

Pooled funds - equity 374,213 - - 374,213

438,877 - 4,437 443,314

Pooled funds - alternative funds 15,246 - - 15,246

Pooled funds - property funds 3,486 - - 3,486

Investment portfolio cash and

settlements pending 19,481 - - 19,481

561,864 - 4,437 566,301

Financial investments measured

at fair value

Level 1 Level 2 Level 3 Total

2017

£000

2017

£000

2017

£000

2017

£000

Sovereign debt securities 26,258 - - 26,258

Corporate debt securities 12,389 - - 12,389

Pooled funds - fixed interest 39,120 - - 39,120

77,767 - - 77,767

Equity securities 64,539 - 4,437 68,976

Pooled funds - equity 363,641 - - 363,641

428,180 - 4,437 432,617

Pooled funds - alternative funds 15,246 - - 15,246

Pooled funds - property funds 3,486 - - 3,486

Investment portfolio cash and

settlements pending 19,245 - - 19,245

543,924 - 4,437 548,361

Accounting classifications and fair values – Group

Accounting classifications and fair values – Charity

54

12. Financial investments (continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Accounting classifications and fair values – Charity

Measurement of fair values

The Group uses the following hierarchy to estimate the fair value of investments held for Trust funds:

Level 1: The quoted price for an identical asset in an active market.

Level 2: When quoted prices are unavailable, the fair value is taken as the price of a recent transaction for an identical asset.

Level 3: If the market for the asset is not active and recent transactions of an identical asset on their own are not a

good estimate of fair value, a valuation technique is used to estimate the fair value. The objective of using a

valuation technique is to estimate what the transaction price would have been on the measurement date in

an arms length exchange motivated by normal business considerations. If the range of reasonable fair value

estimates is significant and the probabilities of the various estimates cannot be reasonably assessed, the

assets are valued at cost less impairment until a reliable measure of fair value becomes available.

Financial investments measured

at fair value

Level 1 Level 2 Level 3 Total

2016

£000

2016

£000

2016

£000

2016

£000

Sovereign debt securities 25,960 - - 25,960

Corporate debt securities 7,604 - - 7,604

Pooled funds - fixed interest 76,455 - - 76,455

110,019 - - 110,019

Equity securities 46,896 - 4,229 51,125

Pooled funds - equity 291,243 - - 291,243

338,139 - 4,229 342,368

Pooled funds - alternative funds 27,432 - - 27,432

Pooled funds - property funds 4,381 - - 4,381

Investment portfolio cash and

settlements pending 14,876 - - 14,876

494,847 - 4,229 499,076

Accounting classifications and fair values – Group

Financial investments measured

at fair value

Level 1 Level 2 Level 3 Total

2016

£000

2016

£000

2016

£000

2016

£000

Sovereign debt securities 25,960 - - 25,960

Corporate debt securities 7,604 - - 7,604

Pooled funds - fixed interest 76,455 - - 76,455

110,019 - - 110,019

Equity securities 47,021 - 4,291 51,312

Pooled funds - equity 296,567 - - 296,567

343,588 - 4,291 347,879

Pooled funds - alternative funds 30,048 - - 30,048

Pooled funds - property funds 4,381 - - 4,381

Investment portfolio cash and

settlements pending14,876 - - 14,876

502,912 - 4,291 507,203

55

Associate

undertaking

Total

Group £000 £000

At 1 May 2016 3,580 3,580

Group’s share of losses (66) (66)

At 30 April 2017 3,514 3,514

Trading

subsidiaries

Associate

undertaking

Total

Charity £000 £000 £000

At 1 May 2016 26,950 3,580 30,530

Additions 6,000 - 6,000

Disposal proceeds (2,025) - (2,025)

Impairment - (66) (66)

At 30 April 2017 30,925 3,514 34,439

14. Subsidiary and associate undertakings

13. Other investments

Details of the entities held as subsidiary and associate undertakings are disclosed in note 2 of

these financial statements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

The open market valuation of each investment property was reviewed between February and April 2017. The

valuations were carried out by an independent, qualified chartered surveyor.

Unrestricted funds Restricted and

endowment funds

Total

Group and charity

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Investment properties 465 250 3,440 650 3,905 900

Unlisted investments 162 13 - - 162 13

Other investments 30 10 - - 30 10

At 30 April 2017 657 273 3,440 650 4,097 923

Unrestricted funds Restricted and

endowment funds

Total

Group and charity £000 £000 £000

As at 1 May 2016 273 650 923

Additions 170 8,690 8,860

Disposal proceeds - (6,736) (6,736)

Revaluation 214 836 1,050

As April 2017 657 3,440 4,097

56

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Group - unrestricted funds

Long leasehold

property &

improvements

Other

leasehold

improvements

Furniture,

fittings &

computer

equipment

Total

£000 £000 £000 £000

Cost or valuation

At 1 May 2016 5,328 591 2,216 8,135

Additions - 108 312 420

Disposals - (72) (98) (170)

At 30 April 2017 5,328 627 2,430 8,385

Depreciation

At 1 May 2016 660 242 2,193 3,095

Charged in year 165 60 84 309

On disposal - (72) (98) (170)

At 30 April 2017 825 230 2,179 3,234

Net book value

At 30 April 2017 4,503 397 251 5,151

At 30 April 2016 4,668 349 23 5,040

15. Tangible fixed assets

Charity - unrestricted funds

Long leasehold

property &

improvements

Other

leasehold

improvements

Furniture,

fittings &

computer

equipment

Total

£000 £000 £000 £000

Cost or valuation

At 1 May 2016 5,328 519 2,101 7,948

Additions - - 225 225

At 30 April 2017 5,328 519 2,326 8,173

Depreciation

At 1 May 2016 660 182 2,090 2,932

Charged in year 165 46 71 282

At 30 April 2017 825 228 2,161 3,214

Net book value

At 30 April 2017 4,503 291 165 4,959

At 30 April 2016 4,668 337 11 5,016

57

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

15. Tangible fixed assets (continued)

Long leasehold property

The long leasehold property consists of the lease to the year 2190 on the land and buildings occupied by CAF as its

principal place of business. The property is held at valuation and was valued at 30 April 2014 by CBRE, Chartered Surveyors.

The valuation was carried out in accordance with the guidelines of the Royal Institution of Chartered Surveyors. The open

market value, on a vacant possession basis, at that date was estimated at £5m.

A revaluation in accordance with appropriate professional guidelines will be carried out when needed to ensure the

valuation is kept up-to-date.

The historical cost carrying value of the property and improvements at the balance sheet date was £3,859,000.

16. Other debtorsUnrestricted funds Restricted and

endowment funds

Total

Group

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Income tax recoverable - - 9,501 4,510 9,501 4,510

Other debtors 845 1,438 987 83 1,832 1,521

845 1,438 10,488 4,593 11,333 6,031

Unrestricted funds Restricted and

endowment funds

Total

Charity

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Amounts due from subsidiary undertakings 3,831 3,713 - - 3,831 3,713

Income tax recoverable - - 8,139 2,881 8,139 2,881

Other debtors 590 462 739 24 1,329 486

4,421 4,175 8,878 2,905 13,299 7,080

Group

Depositor and donor client balances

2017

£000

2016

£000

Repayable on demand 965,532 947,464

Repayable within 30 days 36,531 52,624

1,002,063 1,000,088

17. CAF Bank Depositors’ balances

58

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

18. Donor client balances

The following are either donations to other charities which are being processed by CAF or loans from donor clients. The

loans are for an indefinite period.

Other charitable funds

In addition to the above, the Group manages the following charitable funds on behalf of other trusts and foundations through its

Global Trustee service. The investments held for these charities are maintained in segregated portfolios. None of these amounts

are included in the financial statements of CAF or the Group.

Group

At 1 May

2016

Amounts

received

Amounts paid

to charities

Donations

paid to group

At 30 April

2017

£000 £000 £000 £000 £000

CAF Give As You Earn 4,812 69,491 (32,927) (36,900) 4,476

CAF Donate 184 25,366 (25,483) - 67

4,996 94,857 (58,410) (36,900) 4,543

Concessionary loans payable 1,840 547 (639) (25) 1,723

6,836 95,404 (59,049) (36,925) 6,266

Charity

At 1 May

2016

Amounts

received

Amounts paid

to charities

Donations

paid to CAF

At 30 April

2017

£000 £000 £000 £000 £000

CAF Give As You Earn 4,812 69,491 (32,927) (36,900) 4,476

CAF Donate 184 25,366 (25,483) - 67

4,996 94,857 (58,410) (36,900) 4,543

Concessionary loans payable 1,840 547 (639) (25) 1,723

6,836 95,404 (59,049) (36,925) 6,266

2017

£000

2016

£000

Investments 96,108 77,341

Money market deposits and bank balances 260 248

96,368 77,589

Bank balances with CAF Bank 117 489

96,485 78,078

59

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

19. Amounts due to beneficiary charities

20. Other creditors

Restricted and

endowment funds

Group2017

£000

2016

£000

Payable within 1 year 46,540 10,358

Payable after more than 1 year 11,692 25,864

58,232 36,222

Restricted and

endowment funds

Charity2017

£000

2016

£000

Payable within 1 year 46,366 10,118

Payable after more than 1 year 11,692 25,864

58,058 35,982

Amounts due to beneficiary charities represent contructive obligations, principally in respect of longer term grants.

Group

Unrestricted funds Restricted and

endowment funds

Depositor and donor

client balances

Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Payable on acquisition of

investments - - 110 61 - - 110 61

Trade creditors 479 618 - - - - 479 618

Tax and social security 507 480 - - - - 507 480

Other creditors 3,341 3,479 1,282 1,067 63 95 4,686 4,641

4,327 4,577 1,392 1,128 63 95 5,782 5,800

Included within other creditors are amounts totalling £1.57m (2016: £1.37m) repayable to seven third party investors

of CAF Venturesome. Amounts are repayable within three or six months from receipt of written instruction. These

concessionary loans do not bear interest and amounts are repaid net of any losses incurred.

Charity

Unrestricted funds Restricted and

endowment funds

Donor client

balances

Total

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

2017

£000

2016

£000

Payable on acquisition of

investments - - 110 61 - - 110 61

Trade creditors 479 618 - - - - 479 618

Tax and social security 507 480 - - - - 507 480

Other creditors 1,999 2,014 1,282 1,067 63 149 3,344 3,230

2,985 3,112 1,392 1,128 63 149 4,440 4,389

60

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

21. Long-term loan

In April 2016 Retail Charity Bonds plc (RCB) launched the CAF Retail Charity Bond, which was issued through and is

listed on the London Stock Exchange Retail Bonds platform. RCB raised £20m from the issue of this bond.

The full amount of the funds raised by RCB have been loaned to CAF under the terms of a loan agreement between

CAF and RCB.

The loan is repayable in full in April 2026. Interest is payable at a rate of 5% per annum.

CAF was advanced £19.6m net of the bond issue costs. The bond issue costs of £352k, together with other costs of

£173k associated with the advance of this loan, including legal and accountancy fees, have been capitalised and are

being amortised over the term of the loan.

Carrying value

Group and charity

2017

£000

2016

£000

Unrestricted funds

At May 2016 19,530 -

Loan advanced - 20,000

Capitalised costs - (525)

Amortisation of capitalised costs 41 2

Interest payable for the year 1,020 53

Interest paid (1,020) -

At 30 April 2017 19,571 19,530

Carrying value

Payable

2017

£000

2016

£000

3 months to 6 months 53 53

53 53

5 years and over 19,518 19,477

19,571 19,530

61

22. Loan stock and preference shares

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Depositor and donor

client balances

GroupNotes

2017

£000

2016

£000

Loan stock 22.1

Floating rate:

Second issue - 100

Sixth issue - 250

- 350

Preference shares 22.2 - 1,500

- 1,850

22.1 Loan stock

Subordinated loan stock consisted of unsecured borrowings issued by CAF Bank, for the development and expansion of its

business and to strengthen the capital base. CAF Bank redeemed all the loan stock at par during 2016/17.

22.2 Preference shares

Preference shares represented 1,500,000 9.15% preference shares of £1 issued by CAF Bank. CAF Bank redeemed all the

preference shares at par during 2016/17.

Group Notes

At 1 May

2016

Income and

donations

received

Expenditure

on charitable

activities

Transfers Recognised

gains

& losses

At 30

April

2017

£000 £000 £000 £000 £000 £000

Unrestricted funds 23.1 54,910 38,910 (35,581) 141 1,828 60,208

Restricted funds 23.2 1,062,351 565,837 (480,686) (141) 75,182 1,222,543

Endowment funds 23.2 2,057 - - - 200 2,257

1,119,318 604,747 (516,267) - 77,210 1,285,008

Charity

Unrestricted funds 23.1 53,747 27,692 (24,847) 141 1,828 58,561

Restricted funds 23.2 994,724 463,384 (392,164) (141) 72,467 1,138,270

Endowment funds 23.2 2,057 - - - 200 2,257

1,050,528 491,076 (417,011) - 74,495 1,199,088

Group

At 1 May

2016

Income and

donations

received

Expenditure

on charitable

activities

Transfers Recognised

gains

& losses

At 30

April

2017

£000 £000 £000 £000 £000 £000

General funds 54,191 38,910 (35,581) 162 1,828 59,510

Property revaluation reserve 719 - - (21) - 698

54,910 38,910 (35,581) 141 1,828 60,208

Charity

General funds 53,028 27,692 (24,847) 162 1,828 57,863

Property revaluation reserve 719 - - (21) - 698

53,747 27,692 (24,847) 141 1,828 58,561

23. Statement of funds

23.1 Unrestricted funds

62

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Group

At 1 May

2016

Income and

donations

received

Expenditure

on charitable

activities

Transfers Recognised

gains &

losses

At 30 April

2017

£000 £000 £000 £000 £000 £000

Major donors

CAF Charitable Trusts 779,653 283,836 (176,547) (2,011) 72,467 957,398

Regular givers

Individual charity accounts 92,577 71,991 (80,643) 5,043 - 88,968

Companies

Company accounts 73,610 69,774 (98,169) 1,412 - 46,627

CAF Give As You Earn charity accounts 30,445 31,329 (30,953) (98) - 30,723

104,055 101,103 (129,122) 1,314 - 77,350

Charities

CAF Venturesome accounts 2,700 2 (322) 1,272 - 3,652

CAF Social Impact Fund 5,249 - - (1,840) - 3,409

7,949 2 (322) (568) - 7,061

International

CAF American Donor Fund 47,958 62,319 (55,906) 55 1,431 55,857

CAF America 18,345 40,479 (28,677) (4,926) 1,284 26,505

CAF Canada 100 1,443 (832) - - 711

CAF Russia grant programmes 1,034 1,054 (1,826) 622 - 884

CAF Foundation for Philanthropy 1,226 3,136 (3,162) - - 1,200

68,663 108,431 (90,403) (4,249) 2,715 85,158

Sector support

CAF discretionary funds 9,085 20 (3,526) 518 - 6,097

Other funds 369 454 (123) (188) - 512

9,454 474 (3,649) 330 - 6,609

1,062,351 565,837 (480,686) (141) 75,182 1,222,543

Endowment funds

CAF Russia:

Endowment Fund 677 - - - 48 725

The Ford Foundation 1,380 - - - 152 1,532

2,057 - - - 200 2,257

1,064,408 565,837 (480,686) (141) 75,382 1,224,800

23.2 Restricted funds

23. Statement of funds (continued)

General funds – comprise accumulated operating surpluses, income from investments, legacies and other gifts received.

Property revaluation reserve – represents the diVerence between the net book value and the historical cost of the long

leasehold property occupied by CAF as its principal place of business.

Transfers from restricted funds to unrestricted funds – represents funds previously held as restricted funds from which the

donors have lifted the restriction.

63

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

Charity

At 1 May

2016

Income and

donations

received

Expenditure

on charitable

activities

Transfers Recognised

gains &

losses

At 30 April

2017

£000 £000 £000 £000 £000 £000

Major donors

CAF Charitable Trusts 779,653 283,836 (176,547) (2,011) 72,467 957,398

Regular givers

Individual charity accounts 92,577 71,991 (80,643) 5,043 - 88,968

Companies

Company accounts 73,610 74,075 (98,169) (2,889) - 46,627

CAF Give As You Earn charity accounts 30,445 31,329 (31,008) (43) - 30,723

104,055 105,404 (129,177) (2,932) - 77,350

Charities

CAF Venturesome accounts 2,700 2 (322) 1,272 - 3,652

CAF Social Impact Fund 5,249 - - (1,840) - 3,409

7,949 2 (322) (568) - 7,061

International

CAF Russia grant programmes 1,036 1,677 (1,826) (3) - 884

Sector support

CAF discretionary funds 9,085 20 (3,526) 518 - 6,097

Other funds 369 454 (123) (188) - 512

9,454 474 (3,649) 330 - 6,609

994,724 463,384 (392,164) (141) 72,467 1,138,270

Endowment funds

CAF Russia:

Endowment Fund 677 - - - 48 725

The Ford Foundation 1,380 - - - 152 1,532

2,057 - - - 200 2,257

996,781 463,384 (392,164) (141) 72,667 1,140,527

23.2 Restricted funds (continued)

Restricted funds comprise:

a. CAF Charitable Trusts – consist of capital gifted to

CAF and the related investment income. The capital

is held in accordance with CAF’s investment policy for

CAF Charitable Trusts and investment gains or losses

are credited or charged to the funds. These funds may

only be used to make payments to other charities as

instructed by the donor

b. Individual charity accounts, Company accounts and

CAF Give As You Earn Charity Accounts – represent

amounts gifted to CAF by individual and corporate

donors which are held in accounts until disbursed to

charities on behalf of the donor

c. CAF Venturesome accounts – represent funds set aside

by CAF donors to complement the funds assigned by

the Trustees for CAF Venturesome

d. CAF Social Impact Fund – represents funds set aside by

CAF donors to support the activities of the CAF Social

Impact Fund

e. CAF American Donor Fund, CAF America and CAF

Canada – represent undistributed donations received

by each of these charities. The boards of these entities

review, validate and approve donors’ suggestions for

distributions to charities worldwide

64

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

24. Cash flow statement

f. CAF Russia grant programmes and CAF Foundation

for Philanthropy – represent funds received from

institutional donors which may only be used to make

payments to charities in the former Soviet Union in

accordance with restrictions imposed by the donor

g. CAF discretionary funds – represent funds available to

support the sector at Trustees’ discretion

h. CAF Russia – the two endowments are permanent.

The principals are maintained in segregated funds in

perpetuity and the income from each used to support

CAF’s operations in Russia.

Transfers between restricted funds

Transfers between restricted funds occur where a donor gives funds into a range of restricted funds and subsequently

requests a transfer between the funds.

23.2 Restricted funds (continued)

Group Charity

2017

£000

2016

£000

2017

£000

2016

£000

Net income for the year 165,564 54,082 148,434 32,667

Adjustments for:

Depreciation 309 244 282 220

Gains on debt securities (1,540) - (1,540) -

(Gains)/losses on financial investments (74,559) 14,847 (71,844) 14,315

Gains on other investments (1,051) - (1,051) -

Group share of losses in associate 66 520 66 520

Amortisation and other revaluations of debt securities 4,630 4,541 58 391

Amortisation of capitalised costs of borrowing 41 2 41 2

Non-cash transactions:

In specie transfers and share gifts (48,272) (18,704) (43,589) (18,590)

Gift of property (8,690) - (8,690) -

Defined benefit pension plan expense 196 2,010 196 2,010

Capitalised costs of long-term loan payable - (172) - (172)

Interest on long-term loan 1,020 53 1,020 53

Investment income receivable on Trust Funds (12,803) (10,595) (12,409) (10,217)

(Increase)/decrease in loans and advances to customers (25,379) (24,690) 822 724

Increase in other assets and prepayments (12,577) (5,837) (12,653) (4,523)

Increase/(decrease) in amounts due to beneficiary charities 22,010 (15,577) 22,076 (2,795)

Increase/(decrease) in other liabilities and accruals 1,901 (1,673) 621 (1,543)

Pension deficit reduction plan payments (2,270) (347) (2,270) (347)

Decrease in donor client balances (570) (291) (570) (291)

Increase in CAF Bank depositors' balances 1,975 32,794 - -

Unrealised gains on foreign currency (8,009) (1,225) (4,411) (1,294)

Net cash provided by operating activities 1,992 29,982 14,589 11,130

65

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

25. Operating lease commitments

26. Financial commitments and contingent liabilities

Group Charity

2017

£000

2016

£000

2017

£000

2016

£000

Operating lease payments falling due:

Within one year 680 493 468 409

Between one and five years 2,411 1,548 1,612 1,548

After more than five years 1,472 747 374 747

4,563 2,788 2,454 2,704

2017

£000

2016

£000

Grant commitments 780 691

CAF Venturesome loans 1,505 1,667

CAF Social Impact Fund loans - 580

Charity 2,285 2,938

CAF Bank commitments to customers 14,285 9,099

Group 16,570 12,037

At the balance sheet date the Group and CAF had total commitments under non-cancellable operating leases for land and

buildings as set out below:

At the balance sheet date the Group was committed to the following:

The amounts charged to the SOFA totalled £0.62m and £0.41m (2016: £0.53m and £0.40m) for the Group and CAF, respectively.

Grant commitments to beneficiary charities

At the balance sheet date the Group was committed to pay donations from restricted funds to beneficiary charities over

a period to 2019, subject to certain conditions being met by the charities. No amount has been recorded in the balance

sheet for these amounts.

CAF Venturesome and CAF Social Impact Fund loans to charities

At the balance sheet date CAF Venturesome and CAF Social Impact Fund were committed to provide concessionary loans

to charities, subject to certain conditions being met. No liability has been recorded in the balance sheet for these loans. The

commitments become due or expire within one year (if the charity no longer needs the funding).

CAF Bank commitments to customers

At the balance sheet date CAF Bank had commitments comprising amounts yet to be drawn under loan or overdraft agreements.

66

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

28. Pension obligations

During the year CAF participated in the following:

a. Hargreaves Lansdown

The Hargreaves Lansdown scheme is a defined

contribution self invested group pension. Since 1 July

2012 new employees have been enrolled into this

scheme and from 1 May 2016 all current employees

contributed to this scheme only.

On auto-enrolment the employee contribution rate is

1% of basic salary and CAF also contributes 1%. After

three months employees may elect to increase their

contribution rate to either 3% or 5.67% of basic salary,

with CAF contributing 6% or 11.33% respectively.

b. The Charities Aid Foundation Pension Scheme

The Charities Aid Foundation Pension Scheme is a defined

benefit scheme established on 15 September 2015 and is

closed to new employees and further benefit accrual. The

Charities Aid Foundation Pension Scheme was established

solely to receive a transfer from the Growth Plan, a multi-

employer section of The Pensions Trust in which CAF was

a participating employer.

On 30 April 2016 the Charities Aid Foundation Pension

Scheme received the assets and liabilities relating to

employees and former employees of CAF who were

members of the Growth Plan. The transfer means that

CAF has settled all obligations to the Growth Plan,

including CAF’s share of orphan liabilities.

Since 30 April 2016 members have received benefits

from the Charities Aid Foundation Pension Scheme

rather than the Growth Plan. Benefits provided by the

Charities Aid Foundation Pension Scheme are the same

as those previously provided under the Growth Plan.

27. Contingent assets

At the balance sheet date, the charity had been notified of

a number of legacies for which probate was not yet granted

or other factors indicated that these legacies should not be

recognised as income. The aggregate value of those legacies

was £4.1m (2016: £7.5m).

The first actuarial valuation of the Charities Aid

Foundation Pension Scheme has not yet been carried

out. Until the first actuarial valuation is completed CAF

will pay contributions of £380,000 per annum to fund

the deficit in the Charities Aid Foundation

Pension Scheme.

At 30 April 2017, the Charities Aid Foundation Pension

Scheme assets and liabilities were estimated by an

independent qualified actuary for FRS 102 purposes. The

results, based on assumptions used for FRS 102 follow.

c. Charities Aid Foundation Pension Scheme financial

position and assumptions

i) Amounts recognised in the balance sheet:

2017 2016

£000 £000

Present value of liabilities 17,510 16,000

Fair value of assets (17,815) (13,800)

EVect on asset limit 305 -

Net defined benefit liability - 2,200

ii) Amounts included in the SOFA under FRS 102:

2017 2016

£000 £000

Scheme expenses 168 -

Settlement cost - 2,000

Interest expense 28 10

Total expense recognised

in the SOFA196 2,010

iii) Movement in the net defined benefit liability:

2017 2016

£000 £000

Net defined benefit liability at

1 May 2016 2,200 700

Pension cost in SOFA 196 2,010

Employer contributions (2,270) (347)

Other recognised actuarial gains (431) (163)

Remeasurement of asset limit 305 -

Net defined benefit liability at 30

April 2017- 2,200

67

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

28. Pension obligations (continued)

iv) Movement in present value of the defined

benefit obligation:

2017 2016

£000 £000

Defined benefit obligation at

1 May 2016 16,000 24,500

Employer's part of current service cost - -

Impact of settlement - (7,100)

Interest on obligation 530 560

Contribution from scheme members - -

Actuarial losses/(gains) 1,807 (1,170)

Benefits paid (827) (790)

Defined benefit obligation at

30 April 201717,510 16,000

v) Movement in fair value of scheme assets:

2017 2016

£000 £000

Fair value of the scheme assets at

1 May 2016 13,800 23,800

Interest on scheme assets 502 550

Impact of settlement - (9,100)

Actual return less interest on assets 2,238 (1,007)

Contributions by the employer 2,270 347

Scheme expenses (168) -

Benefits paid (827) (790)

Fair value of scheme assets at

30 April 2017 17,815 13,800

vi) Analysis of the change in the asset limit:

2017 2016

£000 £000

EVect of the asset limit at

1 May 2016 - -

Interest on eVect of the asset limit - -

Remeasurement of the asset limit 305 -

Eiect of the asset limit at

30 April 2017 305 -

vii) Major categories of the scheme assets as a percentage

of total assets are as follows:

2017 2016

Allocation Allocation

Equities 26% 14%

Corporate bonds 0% 7%

Diversified growth funds 16% 0%

Absolute return bonds 11% 0%

Hedge funds 0% 7%

Cash 1% 30%

Property 9% 1%

LDI funds 17% 12%

Annuity policies 20% 29%

100% 100%

The Scheme does not invest directly in property occupied

by the employer or in financial securities issued by the

employer.

68

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

viii) Principal assumptions at the balance sheet date:

2017 2016

Allocation Allocation

Discount rate 2.5% pa 3.4% pa

Inflation measured by

Retail Price Index (RPI)3.3% pa 3.1% pa

Inflation measured by

Consumer Price Index (CPI)2.3% pa 2.1% pa

Pension increases in deferment 0.0% pa 0.0% pa

Pension increases in payment:

CPI capped at 5% pa 2.3% pa 2.1% pa

CPI capped at 2.5% pa 2.0% pa 1.8% pa

Exchange of pension for cash

on retirement

50% of members assumed to

exchange 25% of their pension sum

for a cash sum

50% of members assumed to

exchange 25% of their pension sum

for a cash sum

Base mortality table S2PMA/S2PFA tables with a 90%

scaling factor

S1PMA/S1PFA tables with a 90%

scaling factor

Mortality projection basis

CMI (Core) 2016 projection with a

long-term rate of improvement of

1.5% pa for males and

1.0% pa for females

CMI (Core) 2012 projection with a

long-term rate of improvement of

1.5% pa for males and

1.0% pa for females

Life expectancy of a male

aged 65 at accounting date88.0 yrs 88.7 yrs

Life expectancy of a male aged 65

20 years from accounting date 89.8 yrs 91.0 yrs

Life expectancy of a female aged

65 at accounting date 89.5 yrs 90.6 yrs

Life expectancy of a female aged

65 20 years from accounting date 90.8 yrs 92.1 yrs

Information shown as at 30 April 2016 relates to CAF’s share of the Pensions Trust Growth Plan rather than the Charities

Aid Foundation Pension Scheme.

29. Transactions with related parties

Other than the matters detailed below, none of the Trustees nor any connected persons had a material or beneficial interest

in any contract or undertaking with CAF, other than in the ordinary course of business, nor in the shares of its subsidiary

companies. One of CAF’s trustees is the Chairman of NCVO. Donations paid by CAF, during the year, included £2,066,925

(2016: £1,982,982) to NCVO under the terms of CAF’s Declaration of Trust. The amount due to NCVO at 30 April 2017

was £397,177 (2016: £358,306).

30. Post balance sheet events

There have been no events since the balance sheet date that are required to be adjusted for, or to be disclosed.

28. Pension obligations (continued)

69

31. CAF Bank financial instruments and risk management

CAF Bank is a wholly owned subsidiary of CAF and is authorised by the Prudential Regulation Authority and

regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

The group’s risk management framework and principal risks, including those applicable to CAF Bank, are set

out in the Risk Management Report set out on pages 21 to 25 within the Trustees’ Report. CAF Bank’s exposure

to its principal risks, which are those associated with holding financial instruments, is further described below:

31.1 Credit Risk

CAF Bank’s exposure to and management of credit risk is described on page 22 in the Group Risk Management

Report. The following tables set out CAF Bank’s principal financial instruments from which credit risk arises.

Treasury assets by class

2017 2016

Book value

£000

Market value

£000

Book value

£000

Market value

£000

Listed:

UK government 26,364 26,799 90,028 90,695

Multilateral financial institutions 368,604 370,396 309,297 310,154

Fixed coupon corporate bonds 145,252 146,739 144,042 144,632

Floating rate corporate bonds 174,526 175,355 202,025 201,964

714,746 719,289 745,392 747,445

Unlisted:

Certificates of deposit 20,000 20,225 40,000 40,326

Commercial paper - - 9,901 9,901

Total debt securities 734,746 739,514 795,293 797,672

Balances at Bank of England 203,278 203,278 160,697 160,697

Loans and advances to banks 22,341 22,341 25,996 25,996

960,365 965,133 981,986 984,365

Treasury asset by credit rating

Category (Fitch equivalent credit rating)

2017 2016

Book value

£000

% of book Book value

£000

% of book

UK government 229,642 23.91% 250,726 25.53%

Other AAA 358,050 37.28% 284,388 28.96%

AA+ 32,395 3.37% 49,482 5.04%

AA 9,620 1.00% - 0.00%

AA- 104,393 10.87% 137,903 14.04%

A+ 38,056 3.96% 48,918 4.98%

A 113,849 11.85% 143,705 14.63%

A- 51,666 5.38% 41,948 4.27%

BBB+ 12,173 1.27% 19,179 1.95%

BBB 10,521 1.10% 4,328 0.44%

BBB- - 0.00% 527 0.05%

BB+ - 0.00% 882 0.09%

960,365 100.00% 981,986 100.00%

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

70

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

31.1 Credit Risk (continued)

Treasury assets by exposure value

A collective provision of £522k has been made at 30 April

2017 reflecting losses that may have been incurred but

not yet identified (2016: £269k). One overdraft of £5k was

written oV during the year (2016: £23k).

One loan account was in arrears at 30 April 2017 (2016:

none). One loan account is considered impaired as the

borrower has decided to cease its activity (2016: one). No

loss is expected on the impaired loan due to the value of

security held by CAF Bank.

Secured and unsecured lending

2017 2016

£000 £000

Gross loans and advances to

customers72,916 46,329

Contingent liabilities and

commitments 14,285 9,099

87,201 55,428

Amounts included within the above:

Secured on property 86,173 53,660

Unsecured:

Loans 255 356

Overdrafts 773 1,412

87,201 55,428

30/04/201657%

33%

10%

UK Government and Multilateral Financial Institutions

Financial and Non Financial Institutions <=£12m

Financial and Non Financial Institutions >£12m - £20m

31.2 Liquidity and Funding Risk

CAF Bank’s exposure to and management of Liquidity

and Funding risk is described on page 23 in the group Risk

Management Report.

CAF Bank has a high level of liquidity, holding buVer

eligible assets of £598m. Liquidity buVer assets comprise

investments in the Bank of England Reserve Account, UK

Gilts, T Bills and multilateral development banks.

Lending

CAF Bank’s management and exposure to credit risk in

respect of lending is described on page 22 in the group Risk

Management Report.

CAF Bank’s policies include maximum exposure values, and

limits to manage concentration risk by sector. Exposure to

geographical area is monitored. At 30 April 2017, the largest

loan was £5m. The maximum aggregate exposures to any one

sector and geographical area were 34% and 36% respectively.

Loans, overdrafts and BACS facilities are subject to regular

monitoring of loan performance and individual annual

review. Administration of the loan book is outsourced

to Capita Mortgage Services Ltd who provide regular

management information on a loan by loan and

aggregated basis.

30/04/201763%

32%

6%

71

31.3 Market and Interest Rate Risk

CAF Bank’s exposure to and management of Market and Interest Rate risk is described on page 23 in the group Risk Management

Report. The following tables set out details of the maturity and duration of financial instruments held by CAF Bank.

Non-maturity (on-demand) deposits are behaviourally adjusted as follows:

At 30 April 2017

Next Day Up to 3

months

3 months

to

6 months

6 months

to

1 year

1 year

to

5 years

Over 5

years

Other

items

Total

£000 £000 £000 £000 £000 £000 £000 £000

Assets

Balances at Bank

of England 202,751 527 - - - - - 203,278

Loans and advances

to banks 4,341 10,000 - 5,000 3,000 - - 22,341

Loans and advances

to customers 71,705 - - - - - - 71,705

Debt securities - 215,565 88,064 142,448 288,669 - - 734,746

Prepayments and

accrued income - - - - - - 7,715 7,715

278,797 226,092 88,064 147,448 291,669 - 7,715 1,039,785

Liabilities

Customer accounts 582,092 - - 42,837 368,409 - 10,295 1,003,633

Other liabilities - - - - - - 5,676 5,676

Accruals and deferred

income - - - - - - 126 126

Shareholders’ funds - - - - - - 30,350 30,350

582,092 - - 42,837 368,409 - 46,447 1,039,785

Interest rate

sensitivity gap (303,295) 226,092 88,064 104,611 (76,740) - (38,732) -

Impact of 2% change

in interest rates - 184 (652) (1,538) 3,108 - - 1,102

Assets and liabilities analysed by interest rate pricing time periods:

CafCash (current accounts)

£0 - £249,999 2 - 3 years

£250,000 - £999,999 1 - 2 years

Over £1m 6 - 12 months

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

72

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

31.3 Market and Interest Rate Risk (continued)

31.4 Other categories of risk

Capital risk

Regulatory risk

Operational risk

Cyber risk

The Group approach to exposure to and management of each

of the above risks is described in the Group Risk Management

Report on pages 24 and 25 which includes particular reference

to CAF Bank in respect of regulatory and operational risk.

At 30 April 2016

Next Day Up to 3

months

3 months

to

6 months

6 months

to

1 year

1 year

to

5 years

Over 5

years

Other

items

Total

£000 £000 £000 £000 £000 £000 £000 £000

Assets

Balances at Bank

of England 160,204 493 - - - - - 160,697

Loans and advances

to banks 2,996 - - 15,000 8,000 - - 25,996

Loans and advances

to customers 45,620 - - - - - - 45,620

Debt securities - 294,335 56,340 150,354 294,264 - - 795,293

Prepayments and

accrued income - - - - - - 7,147 7,147

208,820 294,828 56,340 165,354 302,264 - 7,147 1,034,753

Liabilities

Customer accounts 619,242 - - 41,603 337,906 - 2,853 1,001,604

Other liabilities - - - - - - 4,675 4,675

Accruals and deferred

income - - - - - - 249 249

Subordinated liabilities 1,100 - - - - 1,000 - 2,100

Preference shares - - - - - - 1,775 1,775

Shareholders’ funds - - - - - - 24,350 24,350

620,342 - - 41,603 337,906 1,000 33,902 1,034,753

Interest rate

sensitivity gap (411,522) 294,828 56,340 123,751 (35,642) (1,000) (26,755) -

Impact of 2% change

in interest rates - 271 (417) (1,807) 3,035 98 - 1,180

73

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017

2017 2016

£000 £000

Ordinary share capital 21,350 19,350

Distributable reserves 1,000 1,000

Additional tier 1 capital 8,000 4,000

Preference shares - 1,775

Subordinated debt - 2,100

Amortisation - (840)

30,350 27,385

CAF Bank Capital Resources

comprise:

31.5 Capital Management

CAF Bank’s capital management approach is to maintain a

capital base to support the development of its business and

to meet regulatory capital requirements at all times.

The bank’s capital comprises ordinary share capital, additional

tier 1 capital and distributable reserves. CAF Bank is subject

to and has complied with capital requirements set out in

European Capital Requirements Regulations which have been

adopted into UK Law.

CAF Bank has in place systems and controls to help monitor

compliance with its regulatory requirements and to review

new and amended regulations.

74

Patron

HRH Prince Philip, The Duke of Edinburgh KG KT

Board of Trustees

During the year, the members of the board were:

Chairman

Dominic Casserley

Saphieh Ashtiany, Vice Chair

Stuart Barnett FCA

Robin Creswell

Matt Hammerstein

Alison Hutchinson CBE (resigned 09/12/16)

Peter Kellner, Chairman of NCVO (appointed 21/11/16)

Tiina Lee

Sir Martyn Lewis (stood down 21/11/16)

Stephen Lovegrove (term ended 15/09/16)

Carole Machell (appointed 09/02/17)

Iain MacKinnon

Dr Julie Maxton CBE

Roger Perkin (appointed 27/04/17)

Janet Pope (appointed 09/02/17)

Susannah Storey (appointed 09/02/17)

Executive Committee at 13 July 2017

Chief Executive

Sir John Low CBE

Director of Finance and Operations

Mike Dixon FCA

Director of International

Michael Mapstone

CAF Bank CEO

Peter Ostacchini

Director of Product and Marketing

Bridgit Richards

Director of Communications

Ben Russell

Director of Philanthropy and Development

David Stead

Director of Human Resources

Corinne Wells

Auditors

Deloitte LLP, Statutory Auditor

2 New Street Square

London

EC4A 3BZ

Mazars LLP, Internal auditor

Tower Bridge House, St Katherine’s Way

London

E1W 1DD

Principal bankers

National Westminster Bank PLC

214 High Holborn

London

WC1V 7BX

TRUSTEES, OFFICERS AND PROFESSIONAL ADVISERS

Registered charity number 268369

2140A/0717

Charities Aid Foundation

25 Kings Hill Avenue

Kings Hill

West Malling

Kent ME19 4TA

T: 03000 123 000

E: enquiries@cafonline.org

W: www.cafonline.org